A strong ad market, tough peers, an increased consumer spending
behavior-- both in the domestic and international markets-have been
increasing the likelihood of acquisition activity among the
'Admen'. In this backdrop,
Omnicom Group Inc.
(
OMC
), one of the world's leading global marketing and corporate
communications companies, also stands to gain from strategic
acquisitions aimed at fortifying the group's business while
inducing long-term profitability.
Recently, Omnicom Group's Diversified Agency Services (DAS)
announced an agreement with ITOCHU Corporation and a number of
venture capital funds to acquire a majority stake in Medical
Collective Intelligence Co. Ltd. (
MCI
). MCI is a highly respected Japanese online medical communications
agency, founded in 2007. It offers clients in the pharmaceutical
and medical device industries with powerful online market research
services and online CRM solutions.
Diversified Agency Services (DAS), a division of Omnicom,
manages Omnicom's holdings in a variety of marketing disciplines,
including customer relationship management, public relations and
specialty communications. The division's deal with the Japanese
communication agency looks impressive as the combined strength of
Omnicom's healthcare agencies with the digital capabilities of MCI
is anticipated to significantly boost Omnicom's overall client
offering in Japan. The acquisition is also expected to position
Omnicom as the leading dedicated healthcare marketing group in
Japan. ITOCHU remains a shareholder in this acquisition
deal-partnering with the focal parties concerned--to grow and
develop the business.
Omnicom's key growth strategy involving acquisition of
complementary companies is aimed at expanding its client base while
strengthening the entrepreneurial management teams globally.
The latest acquisition involves a stronger challenge for
Omnicom to operate in the world's second largest pharmaceutical
market. MCI's digital CRM solutions and research are well
poised to capitalize on the fastest growing marketing
communications sector, backed by the increased client spending on
digital and interactive communications platforms.
MCI is also looking forward to further extend services
throughout the Asia-Pacific region. With their online market
research and detailing solutions, they plan to penetrate into the
diverse growth markets of China and India, and other South East
Asian countries. With this partnership with Omnicom, they foresee
expansion opportunities in the U.S. and Europe with customized
solutions in the significant healthcare markets. MCI has planned to
persist its operation as a stand-alone agency within Omnicom in
Asia, working closely with its sister healthcare companies
including Targis, AgencyRx Japan and Polaris Consumer
Healthcare.
Omnicom's branded networks and numerous specialty firms provide
advertising, strategic media planning and buying, digital and
interactive marketing, direct and promotional marketing, public
relations and other specialty communications services worldwide. It
directly competes with its peers, such as
The Interpublic Group of Companies Inc.
(
IPG
),
Publicis Groupe SA
(
PUBGY
) and
WPP pl.
(
WPPGY
).
The strategic acquisitions, clinched earlier by the company viz,
Indian PR agency, Sampark, New Zealand-based TouchCast, Biz Tequila
from Vietnam and Jump in the Netherlands, are quite noteworthy.
Besides, strategic acquisitions in complementary businesses and
increased integration, needs special mention. We believe, such
deals in time, would be accretive to growth and business
development.
We currently maintain a long-term Neutral recommendation on the
stock. Omnicom has a Zacks #3 Rank, which translates into a
short-term Hold rating (1-3 months).
INTERPUBLIC GRP (
IPG
): Free Stock Analysis Report
OMNICOM GRP (
OMC
): Free Stock Analysis Report
PUBLICIS GP-ADR (
PUBGY
): Free Stock Analysis Report
WPP GRP PLC (
WPPGY
): Free Stock Analysis Report
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