Next Fifteen Communications acquires Engine UK in $100m deal
UK agency group Next Fifteen Communications has confirmed it is acquiring Engine’s British operations.
Next Fifteen has finalized its acquisition of Engine Group / The Drum
Next Fifteen owns agencies including Elvis, Archetype and Brandwidth. The company announced its ambition to acquire Engine – which is owned by US private equity firm Lake Capital – last month.
Tim Dyson, CEO of Next Fifteen, said: “We are delighted to welcome the people and clients of Engine UK to Next Fifteen. Acquiring this broad-based digital transformation, communications and creative business fits well with our track record and strategy of adding growth businesses that then contribute to our target of doubling the size of our business in the next three to five years.
“Its three businesses are home to great talent and strong client relationships, and provide multiple opportunities to expand and further apply our growth consultancy services.“
Next Fifteen will pay £77.5m ($103.5m) to acquire Engine, paid for primarily by a sale of shares set to raise £50m.
Though Engine is set to retain its brand, it will be merged with Next Fifteen agency ODD upon completion of the deal, with ODD Group chief executive Phil Fearnley will leading the combined company.
Fearnley said: “This merger is about opportunity. For our outstanding people, the opportunity to develop their expertise in a consistently inspiring, generous and energetic culture. For our clients, the opportunities arising from the inspired application of creativity, data and technology to build brand desire and thereby, sales.”
Engine has 600 staff in the UK and about 300 British and international clients including the Royal Navy, baker Warburtons, Red Bull and Sky. Charlie Hurrell, chief client officer of Engine Creative, said: “We are delighted to join the Next 15 family through this merger and are hugely excited that our clients and our talented creative teams will be enriched by access to the breadth of capabilities and opportunities available to them. It’s a fantastic opportunity for our staff.”
Engine’s incumbent management teams will be offered a special bonus scheme to promote margin growth over the next five years. Dyson said: “We look forward to working with the management teams, staff and clients of the three businesses at Engine UK and the other industry leaders within Next Fifteen to execute our growth plan built on our model of independence, incentives and investment.”
Engine UK’s revenues rose 18% last year to £88.6m, giving it an EBITDA (earnings before interest, taxes, depreciation and amortization) of £11.8m.
In a statement, Next Fifteen said it was ”confident” of finding at least £3m in savings over the next two years.
The company hopes to use Engine’s expertise in business transformation and consultancy work to boost its own advisory services, as well as burnishing its capabilities in the corporate reputation and capital markets sectors. Engine’s consultancy work already accounts for 33% of the agency’s revenue.