Holding company Publicis Groupe has agreed to acquire digital agency Rosetta for $575 million in cash, the company said May 17. The deal is expected to close in the third quarter, said Maurice Levy, chairman and CEO of Publicis, during a conference call.
Princeton, NJ-based Rosetta will operate as an independent agency. Rosetta founder and CEO Chris Kuenne will retain his title and report to Publicis COO Jean-Yves Naouri. Levy said Rosetta’s entire management team will remain with the agency through the acquisition, and Kuenne said the agency plans to expand staff from its current 1,100 employees to nearly 1,400 by the end of the year.
Rosetta earned $218 million in revenue last year, according to information the agency submitted to Direct Marketing News earlier this month for its upcoming Agency Business Report. Rosetta’s clients include Johnson & Johnson, Hewlett-Packard, Marriott International, RIM Co. and T-Mobile USA.
Founded in 1998, Rosetta has nine US offices in states such as California, New York and Ohio. Last year, the agency opened its Toronto office to accommodate work for RIM and acquired mobile marketing agency Level Studios. It bought healthcare advertising agency Wishbone ITP in 2009. Rosetta increased its revenue 39% year-over-year to $185.8 million in 2010, all of it coming from its work in the US.
The Rosetta acquisition is similar in price to Publicis’ $530 million purchase of Razorfish, despite Rosetta generating about 40% less revenue than Razorfish was at the time of that August 2009 deal.
Asked about the price difference during the conference call, Levy said that while the Rosetta acquisition is more expensive when considering only revenue, it is more cost-effective when considering earnings before interest, taxes, depreciation and amortization (EBITDA).
Kuenne said during the conference call that the “primary motivation” for the agency to join Publicis is to “help us globalize Rosetta.” He said that it was “crucial” for Rosetta to retain its autonomy under Publicis’ ownership.
“Rosetta’s value proposition is unique in that it combines its savoir-faire in consulting and strategic services with its expertise in technology and creative agency services,” said Levy, in a statement. “When we imagine leveraging Rosetta’s strengths with those of the other networks within Publicis Groupe, we see incredible synergies that will enhance our global position in today’s transforming marketing space.”
Publicis said in a statement that the holding company expects its digital business to contribute 30% of overall 2011 revenue with the addition of Rosetta. Publicis’ digital agencies include Publicis Modem, Razorfish and Digitas. Publicis acquired the latter two agencies in 2009 and 2006, respectively.
Correction: An earlier version of this story incorrectly described the planned organizational structure of Rosetta within Publicis. Rosetta will be an autonomous brand.
