Jupiter goes into orbit
WPP buys 49% of SA’s biggest independent agency group
WPP GROUP, the world’s biggest marketing communications company, has acquired a 49% stake in The Jupiter Drawing Room, South Africa’s largest independent advertising group. Jupiter will remain a stand-alone brand within the WPP empire, which comprises 141 companies, allowing CEO Graham Warsop and his partners to build a global mininetwork under the holding company umbrella.
In a further tribute to the importance attached to the deal, WPP CEO Sir Martin Sorrell announced it to the global media at the world economic forum in Davos, Switzerland. The deal is subject to SA’s Competition Commission approval.
Jupiter is SA’s fourth-biggest advertising group, boasting a blue chip client roster that includes Absa, Edcon, MTN, Sasol, Hyundai, Sanlam and Woolworths. It comprises The Jupiter Drawing Room Johannesburg and Cape Town, Black River FC and MetropolitanRepublic. Another subsidiary, DDB South Africa, will move out of the Jupiter group, which held 53% of its equity. DDB is a global agency owned by Omnicom, a WPP rival, but its South African office had non-equity status.
The Johannesburg agency was founded in 1989 with two employees and one client and the Cape Town office opened in 1994. Over two decades it’s grown into a group earning R235,7m in revenue from billings of R1,4bn. In 2006, investment partner MSG Afrika Holdings, led by CEO Given Mkhari, acquired majority equity in Jupiter Johannesburg.
The attraction of The Jupiter Drawing Room for a global giant like WPP rests in part on its business successes but also on its international reputation for the quality of its strategic and creative output. Jupiter is currently ranked the number one creative agency group in SA by the SA Creative Circle and is the only SA agency to have been ranked in the top five most creative agencies worldwide by US trade publication Advertising Age.
The deal is noteworthy in twomaterial two material respects, saysWarsays Warsop. “WPP is prepared to limit its acquisition to a 49% stake, as opposed to the traditional international network policy of acquiring majority equity. And it’s a testament to the power of the brand that it will become a stand-alone agency group in the WPP family.
“It’s of supreme significance it won’t be incorporated into any existingWPP existing WPP branded agency or network. That leaves the door open to building a micro network – beyond Africa – in the future.” Major agencies in the WPP group include JWT, Ogilvy & Mather, Young & Rubicam and Grey Global.
Mkhari, Jupiter Johannesburg’s non-executive chairman, says it was important the sale facilitated a partial exit while bolstering the company’s competitive edge. MSG Afrika will reduce its stake to 25%; together with chief strategy officer Haydn Townsend’s shareholding and 10% in its Black Staff Trust, empowerment equity will be at 40%. The balance of 11% remains in the hands of the founding partners.
Mkhari regards the Black Staff Trust as a key feature of the transaction. “It’s been established to ensure the sustenance of the company’s impeccable empowerment profile, which remains way above the country’s legislative requirements. It will further assist the company’s quest to attract and retain the most sought-after black talent. All shareholders have contributed in the funding of the trust.”