), a premier global communication services group, has recently
agreed to acquire a 20% stake in Globant S.A., a technology
services provider focused on delivering innovative software
solutions, for $70 million. The strategic move is aimed at
augmenting its market-leading position in digital capabilities,
besides enabling it to target fast-growing geographic markets and
INTERPUBLIC GRP (IPG): Free Stock Analysis
WPP PLC (WPPGY): Free Stock Analysis Report
To read this article on Zacks.com click here.
Headquartered in Buenos Aires, Globant has a strong presence in
Argentina, Brazil, Uruguay, Colombia, the United States, and the
United Kingdom. The geographic diversity, particularly in the
Latin American countries, is likely to benefit WPP with the FIFA
World Cup 2014 and the Summer Olympics 2016 both taking place in
Brazil. In addition, Globant is among a select few companies that
offer both technical and creative expertise on a global scale. To
elucidate, besides providing clients with the requisite
infrastructure and technical support for digital marketing
campaigns, Globant also offers the creative flair and design
skills to effectively drive them. Consequently, a strategic
tie-up with such a unique company is likely to generate
additional revenue for WPP.
Furthermore, Globant has a core competency in some of the
state-of-the-art digital marketing spaces such as mobile, social
networks, cloud computing, big data and e-commerce sites. This
would enable WPP to extend its product portfolio and gain a
footprint in the faster-growing sectors like digital, data, and
application of technology. Over the next five-year period, WPP
expects digital revenues to account for 35%-40% of its total
revenue. In 2013, the company expects its digital revenues to
exceed $6 billion, representing over 33% of its total revenue.
On the other hand, with WPP on board, Globant will strive to be
one of the most innovative software companies in the world.
Through its operating companies, WPP offers a host of advertising
and marketing services including advertising & media
investment management; consumer insight; public relations and
public affairs; direct and digital promotion and relationship
marketing. Consequently, the transaction is a win-win deal for
both the participating companies.
We maintain our Neutral recommendation on WPP, which currently
has a Zacks #3 Rank that translates into a short-term Hold
rating. We also have a Neutral recommendation and a Zacks #3 Rank
Interpublic Group of Companies Inc.
), one of the competitors of WPP.