Publicis Groupe acquires 51% stake in Law and Kenneth
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Mumbai: French advertising firm Publicis Groupe has acquired a 51% stake in Law and Kenneth, India’s largest independent advertising and digital agency, for an undisclosed sum, as part of its expansion plans for India.
Law and Kenneth will be integrated into Saatchi and Saatchi India, Publicis Groupe’s advertising agency, to create a new entity, L&K Saatchi and Saatchi, the French company said in a statement on Thursday.
Praveen Kenneth, who co-founded Law and Kenneth in 2004, will be the chairman and managing director of the new entity, returning to the Publicis fold after about a decade. Kenneth was chief executive officer (CEO) of Publicis India from 1999 to 2003. He will also join the Saatchi and Saatchi Asia-Pacific board.
Publicis Groupe said Law and Kenneth’s management team will take charge of the management operations of L&K Saatchi and Saatchi, with Anil S. Nair continuing as CEO and managing partner, Sandhya Srinivasan as chief strategy officer and managing partner, and Anil K. Nair as CEO, digital and managing partner.
The acquisition is a part of Publicis Groupe’s expansion strategy in emerging markets such as India that currently contribute about 25% to its total revenue.
“Our ambition, is to grow that to 35% by 2017,” Maurice Levy, chairman and chief executive officer of Publicis Groupe, said in an interview last year, adding that the company was seeing fast growth from emerging markets.
“We have been faster in Brazil, and we have doubled our size of operation, as expected, in China. We are doubling our size in India, as compared to 2010, we will be doubling it by 2014,” he said.
Levy had also said the company was looking at “some more acquisitions—digital, advertising and marketing—in India. We need to strengthen our operations”.
The stake acquisition in Law and Kenneth is likely to add muscle to Saatchi and Saatchi’s India operations, which have been flagging lately.
“Law and Kenneth has built a reasonably strong equity in India and this acquisition (of a majority stake by Publicis Groupe) will give a fillip to Saatchi and Saatchi’s India operations,” said Ashish Bhasin, chairman and CEO, South Asia, at Dentsu Aegis Network, a UK-based media company.
Law and Kenneth has grown into a full-service advertising agency specializing in traditional and digital advertising, branding and marketing. The agency’s clients include Renault India Pvt. Ltd, Dabur India Ltd, Tata AIG General Insurance Co. Ltd, Godrej Interio—a business unit of Godrej and Boyce Mfg Co. Ltd, ITC Ltd, Reliance Industries Ltd, Idea Cellular Ltd and Hero MotoCorp Ltd .
It has offices in Mumbai, Delhi, Chennai and Kolkata.
“We are excited to be adding the breadth and depth of talent and resources of Law and Kenneth to the Saatchi and Saatchi network in India, a growing and important market for Publicis Groupe as a whole,” Levy said in Thursday’s statement. “Praveen has built an impressive network throughout the country, one that will provide a heightened added value and a mutually beneficial relationship for both existing and future clients.”
Publicis Groupe already has several of its global networks present in India, including Publicis Worldwide, Saatchi and Saatchi, Leo Burnett, BBH, Starcom MediaVest Group, ZenithOptimedia, DigitasLBi, VivaKi, and MSL Group.
“Law and Kenneth brings an ideas-driven entrepreneurial spirit and a comprehensive range of services to Saatchi and Saatchi, including advertising, design and importantly a strongly integrated digital presence with its digital business Digital Law and Kenneth,” Chris Foster, chairman and CEO of Saatchi and Saatchi Asia-Pacific, said in a statement. “The Saatchi and Saatchi global network is dedicated to strengthening its focus in Asia-Pacific, home to 60% of the world’s population and several vibrant economies. India is a linchpin in this equation.”
The stake purchase in Law and Kenneth follows the acquisitions of Beehive, a Mumbai-based advertising agency, by Publicis Worldwide in October, and Neev, a technology services provider, into Razorfish, a global digital agency of Publicis Groupe, earlier in 2013.
“In a market (India) dominated by the WPP Group, all groups, including ours, will have to adopt a strategy that involves both organic as well as inorganic growth. This (such acquisitions) are one way to close the gap,” said Bhasin of Dentsu Aegis Network.
“However, having said that, in the case of the Publicis Omnicom Group, bringing two large disparate groups together is definitely going to be a challenge,” he added.
In July 2013, Publicis Groupe and its American rival Omnicom Group announced a merger to create what was estimated to be a $35 billion behemoth. The groups are currently in the process of getting all the regulatory approvals.
The merger was expected to create a Rs.1,100 crore by revenue conglomerate in India, behind WPP India’s estimated Rs.1,800 crore in annual revenue, Mint reported in July.