WPP Strengthens Digital Arm - Analyst Blog
June 08 2011 - 7:45AM
Zacks
Advertising titan, WPP
plc’s (WPPGY) wholly-owned subsidiary, Possible Worldwide
recently announced the acquisition of a 70% stake in Gringo
Publicidade Ltda. Financial terms of the transaction were not
disclosed.
Gringo is a leading digital agency
in Brazil and was founded in 2006 in Sao Paulo. It employs 65
people. The agency generated roughly R$10.4 million revenues for
the year ended December 31, 2010. Gross assets for the same period
were R$3 million.
Possible Worldwide is a global
interactive marketing agency and a part of WPP Digital.
The acquisition will enable
Possible Worldwide to leverage from Gringo’s solid client base
including companies like Coca-Cola, Absolut Vodka, Microsoft and
Itau Unibanco. Moreover, it fulfills WPPGY’s objective of expanding
its capabilities in the digital, direct and interactive
disciplines.
Earlier, the company had acquired a
majority stake in F.biz Ltda, the largest independent digital
advertising agency in Brazil. With a strength of over 200
employees, the company served clients including Campari, Itau, Vivo
and NetShoes.
It is evident from these strategic
acquisitions that the company is working hard to expand its
presence in growing markets, like Brazil. The country is WPPGY’s
eighth largest market generating over R$1.1 billion and employing
over 4,500 people.
Based in Dublin, Ireland, WPP Group
plc provides advertising and communications services worldwide. The
company emphasizes new and rapidly developing markets, new media
and consumer insights. Moreover, effective pricing power supports
margins and profit growth.
For the full fiscal year 2011,
management expects revenue growth, excluding the impact of
acquisitions and currency fluctuations to be over 6%; while its
full year margin is quite likely to exceed the company’s margin
improvement target of 0.5%.
The company faces competition from
its peers like Interpublic Group of Companies Inc.
(IPG), Omnicom Group Inc. (OMC), and
Publicis Groupe SA (PUBGY.PK).
We currently maintain an Outperform
recommendation on the stock.
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WPP GRP PLC (WPPGY): Free Stock Analysis Report
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