Perspective: Havas deal proves size obsession is fashionable again

Is dollars 2.1 billion too much to pay for the world’s 11th largest marketing services group? For a group that lacks a global advertising network? Whatever the answer, Dan Snyder seems to have got away with it. The proposed sale of his Snyder Communications group to Havas makes some dotcom shooting stars look dim. In little more than a decade, the 34-year-old Marylander has acquired his way to a 9,000-employee global empire that made dollars 100 million profits last year. Oh, and as part of a private consortium, he bought the Washington Redskins for dollars 850 million too.

Is dollars 2.1 billion too much to pay for the world’s 11th largest

marketing services group? For a group that lacks a global advertising

network? Whatever the answer, Dan Snyder seems to have got away with it.

The proposed sale of his Snyder Communications group to Havas makes some

dotcom shooting stars look dim. In little more than a decade, the

34-year-old Marylander has acquired his way to a 9,000-employee global

empire that made dollars 100 million profits last year. Oh, and as part

of a private consortium, he bought the Washington Redskins for dollars

850 million too.



In truth, the Snyder Communications group meant little. The four

divisions - Arnold, the fastest-growing ad agency in the US; Brann, the

world’s largest direct marketing network; Bounty, the healthcare

operation known to millions of new mothers; and Circle.com, Snyder’s

pooled new-media ventures - obviously include some real gems, but there

is little added value from the centre.



That’s why interested parties looking at buying the Snyder

Communications group had to conclude it was overvalued. The

justification for any premium (some valued the group at dollars 1.5

billion) lies in the individual assets - if the disparate entities are

regarded as such.



For a European-based group like Havas, anxious to establish a second

global advertising network, there are not many better agencies available

upon which to base US foundations than Arnold. What’s more, there are

few chief executives around of the calibre of Arnold’s Ed Eskandarian.

Period.



For the world’s sixth-largest marketing services group, where revenues

from diversified agency services (such as below the line) languish at 35

per cent by contrast with the industry leaders’ 50 to 60 per cent, then

purchasing Brann has a certain logic too.



If acquiring Bounty Healthcare helps Havas’s lead agency network, Euro

RSCG, become the fourth largest in the world, and gives it a lead in the

lucrative healthcare marketing sector, and if adding Circle.com to

Havas’s successful new-media operations makes it the world leader, then

a winning rationale begins to crystallise. If Havas can do this with

little client conflict while tying in key executives, the price doesn’t

look so bad.



It all comes down to the stock market. In this case, if the Paris Bourse

likes it, then the deal’s value for money. Snyder is to be paid for in

future Havas shares, when the group is listed in the US in the late

spring.



However, the headline figures do call to mind the heady 80s. With Dan

Snyder cast as Bob Jacoby, is Alain de Pouzilhac a 21st century Saatchi

brother? Snyder is worth more to Havas than any rival bidder because it

fits better and fulfils some real needs. But there are worrying

undercurrents that advertising’s size obsession is taking hold again.

And just check out Havas’s multiple.



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