Dentsu, fresh from posting better than expected June quarter results, is on the acquisition trail and looking at bigger deals than in the past.
During a briefing with analysts, the Japan-based global advertising group was asked about mergers and acquisitions activity.
Nick Priday, CFO, Dentsu International: “Our M&A pipeline does remain very active. We are looking at a number of deals. Those deals are pretty scaled generally.
“We want to make sure we do a smaller number of larger deals than international itself had done historically to make a more strategic impact on our business.
“The three deals we've done on a year-to-date basis really demonstrate our commitment to reach 50% of revenues from customer transformation and technology going forward because that's where we see the structural growth in our industry."
Dentsu this month reported a strong June quarter with organic growth of 8.2% and is confident of its prospects for the rest of the year.
The Japan network grew 7.9% and Dentsu International 8.4% as the company reported clients continuing to invest in brands, supported by technology, data and digital solutions to enhance their strategies.
Dentsu has recently been increasing its SalesFroce exeprtise via acquisitions. It is buying Pexlify, a leading Salesforce consultancy based in the UK and Ireland. Pexlify will join dentsu's Merkle, a customer experience management (CXM) company.
It also took a majority stake in Extentia, a global technology and services firm with a focus on enterprise mobility, cloud engineering, and user experiences.
Priday says pricing is always competitive for acqusiitions.
"They're scarce assets, which are in high demand," he says.
"I would say that pricing was pretty high six months ago. It's come down a little bit, which does provide an opportunity, but we also always need to make sure that we diligence acquisitions appropriately and don't overpay.
“We're very used to doing acquisitions, and we will continue to do so to add the capability to our business and grow value for shareholders on a go-forward basis.”
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