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.
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
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.