Omnicom moves to rule India with Mudra buy

01 Nov,2011


By Rajiv Banerjee, Amit Bapna & Sonali Krishna


After a decade of on-and-off parleys, US advertising giant Omnicom has sealed a deal to gain control of the Mudra group, the last of the major homegrown advertising networks left in the country.


The deal for a 41% stake will fetch Mudra’s majority shareholder and ADAG boss Mr Anil Ambani around Rs 700 crore, making it the biggest deal in the history of Indian advertising, a person involved in the transaction told ET. Omnicom agency DDB Worldwide has held a 10% in Mudra since 1993, and the latest transaction effectively hands control of the firm founded by Mr Anil Ambani some three decades ago to the US-based firm.


Ambani will continue to own a 49% stake in his personal capacity in the agency, which has revenues of around Rs 200 crore in revenues and Rs 33 crore in net profit. The deal values Mudra at a little over Rs 1,700 crore, around eight-and-a-half times its top line. Omnicom has the option of acquiring another 25% in three years and the entire network in five years, according to the agreement. Reliance ADAG chairman Mr Anil Ambani, add those privy to the details, was offered a board position but opted for a berth on Omnicom’s international advisory committee.


“I am happy for 1,100 families of Mudra professionals, who will now be part of the global network of Omnicom. It’s been a fulfilling journey for me, having started this agency from the shop floor of Reliance Industries’ textile division in Ahmedabad (in 1983),” Mr Anil Ambani told ET.


As per the agreement, Omnicom will now control the Mudra group’s four agencies – Mudra India, DDB Mudra, Mudra Max and Ignite Mudra. Along with these, Omnicom also gets access to 26 pan-India offices. Those close to the deal say that Mudra’s focus on diversified advertising services (DAS) was the primary attraction for Omnicom. Along with branding, communication and marketing, Mudra also has an ‘integrated engagement and experiential agency in Mudra Max and perhaps India’s only agency for entrepreneurs in Ignite Mudra.


Significantly, the Mudra Institute of Communications, Ahmedabad (MICA), a communications management institute, is set to become a global school for Omnicom.


Omnicom Gets Foothold


“Over the past few years there have been heightened levels of discussions that finally culminated in this partnership. We now get aligned in with DDB, and then perhaps can look forward to several tie-ups with Omnicom brands or working closely with several Omnicom brands that come to the country,” says Mr Madhukar Kamath, MD & CEO, Mudra Group. Other than DDB, the Omnicom network includes BBDO, TBWA Worldwide, and public relations firms like Brodeur Worldwide and Fleishman-Hillard.


Omnicom for its part gets a solid foothold in a fast growing market in which it has been distinctly overshadowed by the big boys like WPP, the Interpublic group (IPG) and Publicis. Mudra would rank amongst the top five agencies in India in billings, behind JWT and Ogilvy & Mather, and in a similar league as Draftfcb Ulka and Lowe Lintas (both a part of the IPG network).



Says Mr Tim Love, vice chairman, & CEO, Omnicom Group APIMA (Asia-Pacific India Middle-East Africa): “The deal is an important confirmation of the importance of Asia and India for Omnicom Group’s long range plans for our clients.” “The partnership gives us unprecedented scale across India,” adds Mr Randall Weisenburger, CFO, Omnicom. That scale may still not be enough to unseat the big boys. As IPG CEO Mr Michael Roth says: “Even after the acquisition of Mudra, IPG is still larger.”


Mr Ambani started Mudra in 1983 with a capital base of Rs 10 lakh. The story goes that patriarch Dhirubhai gave the younger son Rs 10 lakh to start the agency, which essentially was an in-house division of Reliance back then. Fresh out of Wharton, Ambani converted it into a separate agency with the Reliance-owned Vimal brand being its first and only account. Ambani came close to selling Mudra in 2002 to Sir Martin Sorrel-lheaded WPP, which offered Rs 170 crore back then for a 70% stake. The wait has been worth it.


Source:The Economic Times

Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved




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