Jupiter goes into or­bit

WPP buys 49% of SA’s big­gest in­de­pen­dent agency group

Finweek English Edition - - Companies & Markets -

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.”

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