M&C Saatchi has made its third attempt to crack the US advertising market with the acquisition of a minority stake in the New York creative agency Shepardson Stern & Kaminsky for about $8m.
The London-listed advertising group has acquired a 33 per cent interest in SS&K, with the option to increase its stake in the future. SS&K, whose clients include Wells Fargo, Starbucks and the White House, produced the most-watched video of the Obama presidential campaign in 2012.
“M&C Saatchi has been quietly turning itself into the nimble network alternative to holding company behemoths,” said Lenny Stern, who started SS&K with Rob Shepardson and Mark Kaminsky in 1993. “For us, it means the chance to work internationally without losing our identity in a bureaucratic fly trap.”
M&C Saatchi, which styles itself as a plucky alternative to the much-larger holding companies WPP, Publicis and Omnicom, has twice attempted to develop a business in New York.
M&C Saatchi first opened an office in New York in 1995, the year the agency was founded by Charles and Maurice Saatchi after they were ousted from the board of Saatchi & Saatchi. But amid fierce competition from American agencies, the office closed in 2007.
The company entered the market for a second time in 2012, but Jeff Brooks, US chief executive, left the business for a rival agency in July and was never replaced. M&C Saatchi said this office would be merged with SS&K, which employs 60 people in New York.
The stake’s $8m price tag reflects a valuation multiple of eight times profit before tax, M&C Saatchi said, based on SS&K’s unaudited operating profits of $1.8m in the year to September 30.
The members of SS&K will be able to elect for M&C Saatchi to purchase 50 per cent of the remaining equity from 2016, and the remaining balance from 2018 for considerations based on profits, the firms said on Tuesday.
The acquisition is the latest in M&C Saatchi’s strategy of building a “federation of entrepreneurs” around the world. In May, the company acquired UK digital agency Lean Mean Fighting Machine, and last year it joined forces with Aeiou, a creative agency in China.
Last year, M&C Saatchi sold Walker Media, its media buying business, to Publicis, as it narrowed its focus to the more creative parts of the marketing industry that are less dependent on scale.
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