Dentsu Aegis Network is buying a majority stake in performance marketing agency Merkle for a fee reported by some sourced to be in excess of $1bn (£767m). The deal involves Dentsu buying shares from Technology Crossover Ventures and other shareholders are selling shares, with Merkle CEO David Williams, the management team and employees retaining a significant minority interest. The transaction is expected to complete before the end of September. It is part of Dentsu Aegis’s strategy to become a 100 per cent digital economy business by 2020.
Merkle generated revenues of $436m in 2015, an increase of 14 per cent on 2014. The company has over 650 clients, access to over 150 marketing databases, and manages over 3.7bn first-party customer records. It employs more than 3,400 people in 21 offices, with 16 in the US and the remainder in London, Bristol, Barcelona, Shanghai, and Nanjing.
In a statement, Merkle said it was a highly complementary fit to Dentsu Aegis’s capability in media, performance, content and brand commerce. It added that it will become one of the network’s leading agency brands, and that the combination is expected to deliver significant revenue growth opportunities, through collaboration providing new capabilities and benefits to both the companies’ clients.
David Williams, Merkle chairman and CEO, said: “As we considered a new investment partner, we sought a fit that would complement our vision, escalate our brand, and provide growth opportunities for our people, while also valuing Merkle’s unique strengths and culture. Becoming a part of Dentsu Aegis Network further strengthens our position and allows us to accelerate our goal of being a world-class global performance marketing agency.
“Through this process I’ve spent a lot of time with Dentsu Aegis Network’s leadership team. Their vision, ambition and perspective on the people-based marketing opportunity align with ours at Merkle. Ultimately this is about doing great work for clients and being part of Dentsu Aegis Network will enhance our ability to be true strategic partners to our clients.” 
Mark Williams, director at Results International, which advised on the sale of UK businesses DBG and Periscopix to Merkle, said that while many in the UK will be unfamiliar with Merkle, this is a massive deal for the industry.
“It’s probably as big as the acquisition of an independent can be,” said Williams. “To get any bigger you’d more than likely be looking at the acquisition of a network. And to see Merkle selling to a trade buyer is going to surprise a lot of people. Merkle is still at the relatively early stage of pursuing global growth by storm – after all it only made inroads into Europe 18 months ago – and it’s a big decision for an agency to partner with an already established global network rather than continue to go it alone at this stage in its development.
“For Dentsu Aegis it’s a massive coup, though they will likely have paid handsomely for the privilege. And rightly so, Merkle is a fantastic business. And it comes hot on the heels of Dentsu Aegis’ acquisition of Gyro just a few weeks ago.”
People would also have been a key factor, Williams said. “Merkle has a wealth of data analytics expertise and employs many of those sought after breeds, the data scientist, the technologist and the tech/ data enabled marketer. It’s no secret that Dentus Aegis is sitting on a large war chest and this acquisition is a brilliant choice, giving the network real scale and breadth and continued diversity outside of its Asian homeland.”
