Why the Havas Work Club acquisition represents a meeting of minds
Last week my colleague Andrew Moss wrote about Havas chief Yannick Bolloré and his spending spree. This week, I’m writing about them too – because a couple of days ago Havas bought a majority stake in Work Club.
Havas’ courtship of the agency has been long and assiduous: talks between the two apparently got underway last year, when they worked together on a European ad account pitch for Iglo (Birds Eye’s owner) – which they subsequently won.
Havas has acquired (for an undisclosed sum) 51 per cent of the agency, which will become Havas Work Club and will be part of the Havas Worldwide UK Group reporting to Kate Robertson, the chairman. Work Club’s founders, Martin Brooks, Jon Claydon (founder of the Claydon Heeley sales promotion and DM agency, which he sold to Omnicom back in 1996), Andy Sandoz and Paddy Griffith; along with two further partners, Ben Mooge and Lisa De Bonis, have all signed a six-year earn-out deal with Havas, with an option to sell the remaining 49 per cent of Work Club shares in four years, although that can be pushed back another ten years.
Havas Work Club will also work with the network's clients across the world, reporting to Havas Worldwide’s global CEO, Andrew Benett.
Following the takeover, Work Club's CEO, Martin Brooks, will stop running the agency on a day-to-day basis and focus on its international growth and development – the two agencies share Absolut vodka-to-Chivas Regal owner Pernod Ricard internationally, and Havas Work Club offices are expected to open in Shanghai, Japan and Africa by the end of this year. Griffith, Work Club's strategy partner, has been promoted to CEO to fill Brooks' former role.
So what’s in it for both parties? Work Club gets the money and backing to spread its wings. On Wednesday, as the ink was drying on the deal, Griffith said: "This is an opportunity to create something real. We never wanted to be a London hotshop and we always talked about creating a digital global network."
As for Havas, well, they get an ambitious, award-winning agency of some scale (100 employees, £6m annual turnover) with some blue-chip clients (the aforementioned Pernod Ricard, Sony, Coca-Cola); a skillset in the fastest-growing disciplines, mobile, social, data and digital; and something very valuable – indies of this size are hot properties on the UK marcomms M&A scene right now because they are just so scarce.
Havas’ strategy seems to be to create a multi-national, multi-disciplined full-service agency, rather than mould itself into a holding group, which would compete with the likes of WPP or Dentsu Aegis Network, and the Work Club acquisition supports that.
But most importantly, Havas gets a meeting of minds, a bunch of like-minded people.
Getting two agencies to fit together culturally as well as strategically, is perhaps the greatest challenge anyone managing a merger or acquisition faces. As my colleague Tony wrote a fortnight ago on this very blog, one of the reasons why the Publicis-Omnicom merger foundered was that they were, in the end, just not that compatible.
At Green Square, this is a hugely important part of our job – putting together buyers and sellers who we know will not only fit together, but will be able to work together in the long term. It’s not just about putting someone who wants to sell up together with someone who’s looking to acquire – it’s our job to ensure that any coming-together really adds value for all concerned.
But in contrast to Omnicom and Publicis, Work Club and Havas seem to genuinely like each other – the attraction is mutual, they have courted and this coming-together is in the long-term interest of both parties.
Havas has in the past year or so been making much of its size – big enough to have global reach and plenty of clout, small enough to be nimble and remain creative. This seems to have been what Work Club was looking for in a suitor.
"It’s the confluence of brand creativity with media and data that we see in Havas. A network small enough and far sighted enough to build the first true global full-service agency approach,” said Griffith on Wednesday. And here’s what for me is the killer statement: “A lot of it is gut feel – it's a good cultural fit. Havas has a challenger perspective and they didn't come at us with an agency approach; they have a compelling digital-centric vision. We're not walking into a lot of incumbent digital stuff because it's all integrated."
And Yannick Bolloré added: “Welcoming Work Club to Havas is another important move in the development of our global ‘innovation inside’ strategy. It further boosts Havas’ digital offering where creativity, media and data converge to produce a unique collaborative approach for our clients. Work Club is a dynamic and creative agency, and one of the best digital players in the industry. Being part of Havas will give them an international edge and scale. I am excited about our partnership.”
A marriage made in heaven?
Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector.