Kekst and Co., an independent corporate and financial PR firm and one of the biggest players in the mergers-and-acquisitions space, announced today it's selling to Publicis Groupe. Terms of the deal weren't disclosed.
Kekst founder keeps post
Founder-CEO Gershon Kekst will continue running the 38-year-old agency, which is currently advising Anheuser-Busch through an unsolicited takeover bid from InBev. Kekst will keep its name and operate autonomously as a member of the holding company's specialized agencies and marketing services division.
That autonomy "was one of the main issues we were concerned about and one of the objectives we wanted to achieve in this transaction, and Publicis was very open to it," said Jeffrey Taufield, senior partner, Kekst.
Other PR firms in Publicis' specialized division include Manning Selvage & Lee, Publicis Consultants and Freud Communications.
Publicis is most likely looking to position itself to get a piece of the M&A pie, which Mr. Taufield expects to be rather large going forward. In the first half of 2008, he said, Kekst has done 67 "announced M&A transactions" valued at more than $108 billion.
'Bright future' foreseen
"[The economic climate] bodes well for stock transactions because stocks have been beaten down," Mr. Taufield said. "It certainly bodes well for companies that have cash and want to acquire companies. It bodes well for consolidations in many industries -- financial services is going to be very big, I believe. I think the future in M&A is very bright."
Mr. Taufield, who said the agency's 30 partners have all signed employment contracts with Publicis, described the deal as the culmination of a long relationship.
"This alliance has been in the making for many years," Mr. Taufield said. "They have been a client of our firm for about 20 years, and we have advised them on some of their most important transactions."
Mr. Taufield said Kekst doesn't have prior relationships with any of the other PR agencies under the Publicis umbrella. Mark Hass, worldwide CEO of Manning Selvage & Lee, said he hopes that will change.
"The acquisition strengthens the group's PR offer in North America," Mr. Hass said. "And I hope there will be collaboration opportunities between MS&L and Kekst, even though the two will be operating as independent agencies within the Publicis Groupe."
In a statement, Publicis Chairman-CEO Maurice Levy said: "We are investing in Kekst and Co. today because of the depth of its professional capability and its future growth potential. We view this as an extremely important addition to our group's capabilities."
For Kekst, the acquisition will allow the agency to create a larger global footprint.
"For the first time in our history, this alliance will allow us to seriously examine the potential of geographic growth if we choose to do it," Mr. Taufield said. "There are a lot of options on the table as we look to the future and build our organization. For 38 years we have been a New York-based firm. We do business with clients around the world, but this is going to help us extend our capabilities globally and also help clients more locally."
Mr. Taufield said the decision to become part of a holding company after nearly 40 years is in no way a sign that the agency is struggling. He said revenues for the first half of 2008 have exceeded those of 2007. New-business growth for the first half of the year is also up significantly over last year, he said. In 2007, Kekst finished first among the small crop of M&A PR specialists, according to Mergermarket.
"New business assignments, not just mergers and acquisitions, which we remain the No. 1 firm in the industry for -- we're up across the board," Mr. Taufield said. "We are getting a lot of business in bankruptcies, litigation support, corporate governance and financial disclosures. Business is coming in all our core practice areas. So this is a good time to do this."