Dentsu in talks to buy out digital agency Webchutney

21 Dec,2012

By Ratna Bhushan

 

Japanese advertising agency Dentsu is in advanced talks to buy out leading digital advertising agency and consulting firm Webchutney.

 

This will be Dentsu’s first local acquisition in the digital agency space. Network18, which holds 70.06% stake in the Sidharth Rao-promoted Webchutney Studios, is looking to exit from the alliance, two officials with knowledge of the development said. The deal size is estimated at between Rs 40 crore and Rs 60 crore for Network18’s 70.06%, which values the agency at roughly Rs 90 crore on the higher side.

 

“Dentsu is expected to buy out Network 18’s stake in Webchutney. The promoters of Webchutney will continue to hold their stakes,” one of the officials quoted earlier said.

 

Rohit Ohri

Rohit Ohri, Dentsu India group’s executive chairman said: “We are looking to scale up our digital capabilities in India. Obviously, acquisition is one of the options. We are currently discussing the various options and putting together our plan.” Officials close to the development say Webchutney, which was ranked the No 1 digital agency in the latest Brand Equity Agency Reckoner, is the front-runner in Dentsu’s quest for inorganic growth in this space.

 

Network18 had invested in Webchutney through its investment arms, Capital18 Ltd and Capital18 Fincap, in 2007. The agency, which services firms like Airtel, Microsoft, Hindustan Unilever, Marico and Titan, posted a profit of Rs 6.35 crore in the financial year 2011-2012 on revenues of Rs 21.55 crore. Network18 owns 49.42% of the shareholding through Capital18, Mauritius and 20.64% through Capital18 Fincap.

 

Webchutney’s Rao said: “It’s very early to talk about any new alliance… nothing has been finalised as we are evaluating many options.”

 

Sarbvir Singh, Capital 18 MD, too neither denied nor confirmed if Network18 was exiting Webchutney. “In the normal course of business, at any given point in time, we are approached by several interested parties and we speak to them as appropriate. We have no other comment to offer at this point.”

 

Webchutney was set up in 1999 by entrepreneurs Sidharth Rao and Sudesh Samaria. The agency’s area of work includes online advertising, website design, mobile marketing and social media. Its employee strength is about 200.

 

In July, globally Dentsu had acquired British media buying group Aegis for $4.9 billion. Back home, too, the Japanese agency has been on the prowl. In August, it acquired majority stake in creative hotshop Taproot.

 

Founded by ad men Agnello Dias and Santosh Padhi, Taproot has created clutter-breaking ads including PepsiCo’s ‘change the game’ and Airtel’s ‘jo tera hai wo mera hai’.

 

Denstu also has an indirect alliance with mobile marketing agency ad2c, a collaboration between Japan’s D2 Communications and Singapore-based Affle, led in India by Madan Sanglikar. In mid-August Aegis had acquired D2 Communications, a digital marketing and search agency. Indirectly, this deal gave Dentsu access to the digital space.

 

Dentsu’s clients include car maker Toyota and electronic firm Panasonic whilst Aegis services brands such as Adidas and Philips.

 

Digital agencies are increasingly being wooed by traditional ones. Earlier this year, Publicis Groupe bought out digital and performance marketing firms Resultrix and Indigo Consulting in two back-to-back deals. And in mid-June this year, WPP Group bought out a majority stake in Hungama Digital Services through its agency JWT Singapore.

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

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