Publicis Takes Stake of Up to 24.9% in Matomy for as Much as $82 Million

Acquisition brings together giant old-line ad agency from France with Israeli digital startup

Michael Rochvarger
Michael Rochvarger
Maurice Levy, CEO of Publicis Groupe SA, during a Bloomberg Television interview in London on Friday, Nov. 30, 2012.
Maurice Levy, CEO of Publicis Groupe SA, during a Bloomberg Television interview in London on Friday, Nov. 30, 2012.Credit: Bloomberg
Michael Rochvarger
Michael Rochvarger

France’s Publicis Groupe, one the four biggest advertising agencies in the world, agreed yesterday to buy up to a 24.9% stake in the Israeli digital ad firm Matmony Media Group for about $82 million.

Publicis, which is led by Maurice Levy, will buy 20% of Matomy now and has an option to acquire another 4.9% within the next 45 days, under the agreement. The purchase valued Matomy at $327 million, or 227 pence ($3.65) a share, its offering price when the company went public in London last July.

The marriage between one of the biggest and most veteran advertising groups in the world – Publicis was founded in 1926 and had revenues last year of 6.6 billion euros ($8.4 billion) – comes as big advertisers shift more of their spending to online marketing.

Thus ad agencies like Publicis and its larger rivals WPP and Omnicom have been snapping up start-ups to gain technological knowhow. Publicis’ rival WPP agreed last month to make a $25 million investment in the U.S. advertising-technology company AppNexus.

Matomy, which counts American Express and HSBC among its clients, specializes in so-called performance-based advertising that allows big companies to track the effectiveness of their online marketing. It earns a fee from advertisers only when it achieves certain pre-defined measurable results, such as sales or mobile app installations.

“Matomy is fueled by the innovators and technology experts of Israel and has quickly risen to the top of this important market by creating a world-leading, state-of-the-art platform,” Levy said.

The deal also shows how Publicis is seeking to boost growth after the failure in May of its mega-merger with Omnicom hurt second-quarter performance by buying stakes in smaller companies.

In spite of the boost, the deal should give Matmony access to Publicis’s client base. Its shares were down about 1.3% in London trading late in the day Monday at 235 pence.

Matomy is tiny compared to Publicis, posting 117.34 million pounds in sales last year and a net profit of 4.44 million pounds. In the first half of this year, sales grew 9.5% to $107.6 million. But figures cited by Matomy forecast performance-based advertising revenues to reach as much as $60 billion by 2020 from $12 billion today.

“The pure performance advertising space is an area of high growth potential fueled by innovation and technology across all channels,” said Matomy’s chairman, Ilan Shiloah, in a statement. “With Publicis Groupe becoming our largest shareholder, we will be able to create a more mature and sustainable ecosystem.”

Based in Tel Aviv, Matomy was formed in 2007 and employs 400 people in offices around the world, providing services from 1,600 active clients

The French bank Rothschild advised Matomy’s core shareholders on the sale.

Reuters contributed to this report.

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