WPP plc has recently agreed to acquire a 20% stake in Globant S.A., a technology services provider focused on delivering innovative software solutions, for $70 million. The strategic move is aimed at augmenting its market-leading position in digital capabilities, besides enabling it to target fast-growing geographic markets and emerging sectors.
From its start-up head office in Buenos Aires, Globant now has 17 branch offices, including San Francisco, Boston and London. The geographic diversity, particularly in the Latin American countries, is likely to benefit WPP with the FIFA World Cup 2014 and the Summer Olympics 2016 both taking place in Brazil. In addition, Globant is among a select few companies that offer both technical and creative expertise on a global scale. To elucidate, besides providing clients with the requisite infrastructure and technical support for digital marketing campaigns, Globant also offers the creative flair and design skills to effectively drive them. Consequently, a strategic tie-up with such a unique company is likely to generate additional revenue for WPP.
Furthermore, Globant has a core competency in some of the state-of-the-art digital marketing spaces such as mobile, social networks, cloud computing, big data and e-commerce sites. This would enable WPP to extend its product portfolio and gain a footprint in the faster-growing sectors like digital, data, and application of technology.
A rapidly growing business, Globant’s net revenue for the year ended December 31, 2011 was US$90m and half year net revenue to June 20, 2012 was US$56.9m. WPP is to invest approximately $70m in acquiring its stake.
In 2012 WPP completed 25 transactions with companies that are in either faster growing markets, or faster growing sectors such as digital, data or application of technology, or both. WPP’s digital revenues (including associates) are budgeted at over US$6bn in 2013, representing 33 per cent of the group’s total revenues, which in 2011 came to US$16bn.
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