Advertising conglomerate Omnicom Group Inc. took a majority stake in the Mudra Group in an attempt to increase its presence in Asia’s third biggest economy and one of the world’s fastest growing markets.
Financial details of the deal weren’t disclosed; Omnicom already has a 10% stake in Mudra, owned by Anil Ambani’s Reliance Group.
“This acquisition is an important step in achieving Omnicom’s strategy to extend and deepen our presence in rapidly growing markets,” John Wren, president and chief executive officer of Omnicom Group, said in a release.
Omicom ended the third quarter of its financial year with $3.38 billion (around Rs 19, 502 crore) in revenue, split almost evenly between revenue from the US and other markets.
The acquisition will give Omnicom much-needed scale in the country, said Arvind Sharma, chairman of Leo Burnett India, part of Publicis Groupe, a rival of Omnicom. “India is a strategically important market for almost all multi-national clients. Many of them are already here. And those who are not here are planning to be here soon.”
The development was first reported by the Financial Times (FT). Wren told FT that Omnicom was paying fair value for the Mudra stake. He added that the deal gave Omnicom the backbone to expand integrated services including retail and public relations.
Madhukar Kamath, chief executive, Mudra Group described the deal as a “natural progression of a relationship that has spanned many years”.
Under the terms of the acquisition, Ambani will will join the Omnicom International Advisory Committee.
“The deal adds more firepower to Mudra as a brand,” added Kamath. “A 10% share is neither here nor there. Omnicom taking a majority stake in Mudra means that the agency comes firmly under the global network,” said Amit Ray, chief operating officer (COO) of Lintas Media Group (LMG) and a former Mudra employee.
Omnicom fully owns TBWA India, has a minority stake in RK Swamy BBDO Pvt. Ltd and a majority stake in BBDO India. It also owns media planning and buying agency OMD and plans to launch another media buying company PHD.
The acquisition will give Omnicom a large integrated communications presence in the country, said Shiv Sethuraman, chief executive of TBWA India.
“It will give Omnicom new channels of growth in areas as diverse as shopper marketing, retail, outdoor etc. Market leader (in India) WPP has so far not seen a challenger here so far, which it now will. Omnicom is a formidable force in other international markets.”
There is speculation that the move could lead to a complete exit by Reliance Group, especially since all its own advertising business has been moved out of Mudra, said a former Mudra employee who didn’t want to be identified. Mint couldn’t independently verify this.
The US-based group has had a late start in India, said Sam Balsara, chairman and managing director of Madison, which has a strategic relationship with WPP.
“India is where the growth comes from. It is the desire of every large advertising and communications group to increase presence in the Indian market and gain market share (globally),” Balsara said. “Omnicom is one of the largest groups globally and yet their presence in India has been far from significant. From their point of view, it was strategically imperative for them to acquire a majority stake in a large advertising agency.”