WPPGY Acquires Barrows & EffectiveUI - Analyst Blog

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Advertising titan, WPP Group Plc. ( WPPGY ) recently concluded twin acquisitions; both aimed at expanding the company's reach in the fast growing markets of the world. The first acquisition involved a 35% stake in retail marketing solutions provider, Barrows.

The target company is well known for its services among blue chip companies in the fmcg sector. With a huge client base, having roughly 400 employees and a number of offices in Brazil, South Africa and the UK, Barrow's will open up new avenues for WPP Group. As of December 31, 2011, Barrows generated revenues of approximately US$62.0 million and had roughly US$18.3 million in gross assets.


As for the second deal, WPP Group acquired assets of Colorado-based EffectiveUI. Financial terms of the transaction were not disclosed. The latter is a leader in customer insight and specializes in providing user-friendly designs and fostering developments. The acquired assets will complement WPPGY's existing digital units including Wunderman, OgilvyOne and VML, and to add a few more, WPP Digital and Possible Worldwide.

EffectiveUI employs around 100 people and had approximately $6.0 million in gross assets ending 31 December, 2011. The agency generated roughly $20.8 million in revenues during the same period.  

In addition to the acquisitions, WPPGY's subsidiary GroupM announced the launch of GroupM Next. The support unit will primarily work for four agencies including Maxus, MEC, Mediacom and Mindshare.

Through these strategic acquisitions and ventures, WPPGY aims at expanding its operations in fast growing emerging markets and gaining access to vast untapped markets in those regions. In the fiscal year 2011, WPPGY made roughly 24 acquisitions in new markets, 32 in new media and 8 in consumer insight.

The current Zacks Consensus EPS Estimates for WPP plc are $5.75 and $6.30 for the fiscal years 2012 and 2013, respectively. The estimates represent a year-over-year growth of 6.84% for 2012 and 9.53% for 2013.

Based in Dublin, Ireland, WPP Group provides advertising and communications services worldwide. The company provides stiff competition to its peers like Interpublic Group of Companies Inc. ( IPG ), Omnicom Group Inc. ( OMC ) and Publicis Groupe SA (PUBGY.PK).

We currently maintain a Neutral recommendation on the stock.


 
INTERPUBLIC GRP ( IPG ): Free Stock Analysis Report
 
OMNICOM GRP ( OMC ): Free Stock Analysis Report
 
WPP PLC ( WPPGY ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: IPG , OMC , WPPGY

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