Aegis Buying U.S. Digital Agency Roundarch for $125 Million
Aegis plans to purchase U.S. digital agency Roundarch for an initial $125 million. Including earnouts, the deal could reach $250 million over the next five years.
The deal is U.K.-based Aegis's latest attempt to acquire scale in digital advertising in the U.S. In 2010, Roundarch brought in $51 million in U.S. revenue from digital, while Aegis' existing digital agency Isobar made just $25 million, according to Ad Age DataCenter . If regulators approve the deal, the two agencies will combine to form RoundarchIsobar. Aegis expects the transaction to close in the next 30 days.
Roundarch, which employs 250 people in Chicago, Denver, Boston and New York, builds websites and apps for clients such as Avis, HBO, Motorola and the U.S. Air Force.
Such digital-development talent has been hot commodity in adland: Deloitte recently acquired mobile shop Ubermind for $40 million and WPP agency JWT acquired Digitaria in 2010. Interpublic Group of Cos digital agency Huge was named to Ad Age 's Agency A-List earlier this year.
Roundarch had pretax profit of $11.5 million in 2010, with assets of $14 million, according to a public statement from Aegis.
Aegis, the world's sixth-largest advertising holding company, has some momentum in the U.S. Its media agency Carat recently won General Motors' $3 billion account in a review, beating larger rivals.
With Roundarch, Aegis Media expects the proportion of total global revenues from digital to increase to 40%, said Aegis Group CEO Jerry Buhlmann in a statement announcing the deal.
Roundarch had revenue of $62.8 million in 2011, all from the U.S., and of $51.5 million in 2010, according to information the agency submitted to Ad Age DataCenter for the publication's upcoming Agency Report. Roundarch was founded in 2000 by Deloitte and WPP. In 2005, the company became independent via a management buyout led by Geoff Cubitt and Jeff Maling, now co-presidents of the company. Roundarch ranked No. 39 among U.S. digital agencies by U.S. revenue in 2010.
Combining Isobar and Roundarch would bring the new entity up to No. 27 among U.S. digital agencies, according to the DataCenter 2010 revenue estimates.