Roundarch acquisition strengthens Isobar as a leading global force in digital
Aegis Group plc (“Aegis”), the world’s leading, focused media and digital communications group, is pleased to announce that it has reached agreement to acquire the holding company of Roundarch Inc. (“Roundarch”), the US digital agency, for an initial consideration of US $125 million (£79 million).
Roundarch is a leading digital agency which specialises in designing and building enterprise-class digital solutions for clients such as Avis, HBO, Bloomberg Sports, Motorola and the US Air Force. The acquisition of Roundarch is in line with Aegis Group’s strategy to target acquisitions with a specific focus on digital businesses, North America and faster-growing regions.
With offices in Chicago, Denver, Boston and New York Roundarch employs 250 staff and its service offerings include strategy, design, development and outsourcing across all digital channels, including web, mobile and social media.
Following the acquisition, Roundarch will be combined with Isobar, Aegis Media’s existing digital creative network in the US, to form RoundarchIsobar. RoundarchIsobar will be a top tier digital agency with the depth and resources to compete for domestic and global assignments against the leading digital players in the US, consolidating Aegis’s competitive position in this important vertical.
Commenting on the acquisition of Roundarch, Jerry Buhlmann, Chief Executive of Aegis Group plc said:
“We are delighted to announce the acquisition of Roundarch which is a highly successful US digital agency with a strong track record of sustained growth and performance. Combining Roundarch with Isobar places Aegis at the forefront of digital communications in the US, the world‘s largest advertising market. Following its integration, we expect the proportion of Aegis Media’s total global revenues from digital to increase to 40%.
“After the great recent success of winning the US $3 billion global media account for General Motors, this acquisition builds on the strong momentum we have in the business, both in the US and globally. Aegis remains strongly positioned to maintain its market-leading organic growth profile and is uniquely placed for the convergent media environment.
“We are optimistic about the outlook for the advertising sector in 2012, which will be supported by a number of major sporting events and the US Presidential Elections.”
The acquisition of Roundarch is subject to a five-year earn-out structure from 2012 to 2016 with further annual consideration payments being made, subject to the level of future profit growth attained. The total consideration for the acquisition by 2017 is expected to be around US $250 million (£159 million). If Roundarch significantly outperforms existing projections, the total consideration could be higher with a cap on the maximum amount payable of US $360 million (£228 million). All consideration payments will be satisfied in cash.
The audited profit before tax of Roundarch for the year ended 31 December 2010 was US $ 11.5 million (£7 million) and the value of the gross assets at that time was US $14 million (£9 million). The acquisition will be earnings accretive for Aegis in the first full year of ownership, during which time it is also expected to meet the returns criteria set out at the Aegis Group Investor Day in November 2011 (presentations from which can be found at www.aegisplc.com).
The vendors are Geoff Cubitt, Jeff Maling and other shareholder employees. Geoff Cubitt and Jeff Maling will co-lead the new US entity of RoundarchIsobar, with Darryl Gehly, President of Isobar North America.
Nigel Morris, CEO of Aegis Media Americas said: “As demonstrated by our recent win of GM’s global media business, Aegis Media has real momentum in the US market and this acquisition is a very significant part of our overall plan and will make us even more of a force for convergence and innovation. A powerful Isobar has been key to that plan and Roundarch is an agency we have admired for a long time, with great people, doing great digital work. Bringing them together with Isobar to create RoundarchIsobar will produce a new powerhouse in the US digital agency sector and add US scale to the global geographic depth of the Isobar network.”
Jeff Maling, President & Chief Experience Officer of Roundarch said: “Combining with Isobar NA will give us a formidable US presence and make us a part of one of the most respected global digital agencies. The deal will also expand our strong design and technology capabilities to include world-class marketing.”
Geoff Cubitt, President & Chief Technology Officer of Roundarch said: “Roundarch has consistently been an innovator in the digital space and we are increasingly working with our clients to create digital experiences that blur the lines between product and advertising. Joining Aegis Media is a natural evolution as its gives us the ability to assist clients with creating exceptional brand experiences whether it is bought media, earned media or owned media which has always been our specialty.”
Completion of the acquisition of Roundarch is contingent upon termination of the mandatory antitrust review period by the U.S. Department of Justice and U.S. Federal Trade Commission under the Hart-Scott-Rodino Act, which Aegis expects to occur within the next thirty days, as well as the satisfaction of other customary closing conditions, including but not limited to obtaining certain consents and approvals from third parties.
For further information please contact:
Aegis Group plc
||Head of Investor Relations
||+44 (0) 20 7070 7708
|Group Director of Communications
Corporate Communications Manager
|+44 (0) 20 7550 3469
+44 (0) 20 7550 3461
||+44 20 7353 4200
|James Macey White
||+44 20 7353 4200
Notes to Editors:
The US $: £ exchange rate used in this announcement is US $1.5761: £1, as at 21 February 2012.
About Aegis Group plc:
Aegis Group plc is the world’s leading focused media and digital communications group. Made up of two operating businesses, Aegis Media (Carat, Vizeum, Posterscope, Isobar and iProspect) and Aztec, the scan-based market and consumer insights company, Aegis Group helps clients build consumer relationships by communicating their products and brands effectively. Our services include communications strategy through digital creative execution, media planning and buying, brand tracking and marketing analytics. Aegis Group plc shares are listed on the London Stock Exchange (AEGS.L).
Isobar is a modern communications agency network, made up of a committed and diverse group of over 2,500 people in 34 markets. Established in 2003, Isobar is the global home for the world’s finest digital pioneers and the smartest traditional marketing talent, that helps reconnect brands with their fans and customers by creating irresistible ideas combining creative, planning, technology and data. Together, Isobar brings people and brands together, like never before.
Roundarch is a passionate advocate for the power of digital. With offices in Boston, Chicago, Denver, and New York, Roundarch delivers digital experiences for the world's largest organizations. This includes web experiences, rich web and mobile applications, digital marketing campaigns, SEO strategy and more with projects range from HBO's high-traffic consumer site to private banking portals to Tesla Motors' touch screen dashboard. Roundarch’s projects all reflect a common need to optimize the digital channel in highly competitive and complex environments.
Geoff Cubitt and Jeff Maling have been with Roundarch since it was founded by Deloitte and WPP in 2000. In 2005, they led a management buy-out. Since taking the company independent, Geoff and Jeff have overseen a 40% compound annual growth rate and have established a roster of blue chip clients. Prior to Roundarch, both were leaders in Deloitte’s Customer Relationship Management and e-Business practices.