WPP confirms Native acquisition

It has been confirmed that global advertising powerhouse WPP is buying digital agency Native, a story Ventureburn first reported on in September last year.

At the time Native MD Jarred Cinman denied that the two companies were in talks. “I don’t know where you’re getting that information from, but it’s absolutely not true,” he said.

“Look, in this industry people are always going to talk to each other, but that’s no reason to prematurely sell my business,” he said at the time.

Cinman today tweeted:

Well there it is. At last the next exciting chapter of our journey has begun #NATIVEVML

— jarredcinman (@jarredcinman) June 25, 2013

The deal is being done through WPP subsidiary Young & Rubicam. The company, founded in 1923, specialises in advertising, digital and social media, sales promotion, direct marketing and brand identity consulting. The deal sees Y&R network partner VML acquire 76% of NATIVE for an undisclosed amount.

Native will be rebranded as Native VML and all of its directors will stay in the business as well as remaining shareholders. According to Marklives, they have been signed to a minimum of five years with the new agency.

According to WPP’s Investor note on the deal NATIVE’s unaudited revenues for the year ended 28 February 2013 were approximately R80-million, with gross assets at the same date of approximately R39-million.

“Our global expansion is following a very simple strategy — taking great care in finding the right partner — strong capabilities, of course, but also the right fit in terms of people and culture. We know NATIVE is an extraordinary match on all counts and a great platform for us as we look to build our brand further in the African market,” said Jon Cook, President & CEO of VML.

“The launch of NATIVE VML marks a profound step in our history,” said Jason Xenopoulos, CEO of NATIVE. “It will allow us to further drive our leadership position in South Africa by bringing world-class skills and the power of VML and the whole Y&R Advertising network to the continent.”

WPP has been active in the acquisitions space lately, both in developed countries and emerging markets like South Africa. It’s hardly surprising therefore that the deal apparently had the blessing of WPP boss Sir Martin Sorrell after he met with Yossi Schwartz, Group Chairman of Y&R South Africa, and NATIVE CEO Jason Xenopoulos about a year ago.

Most recently it acquired a majority stake in South African-born digital marketing conduit Acceleration for an undisclosed sum. An investment in Native, were it to happen, wouldn’t be all that surprising then.

In 2007 meanwhile it bought out digital agency Aqua Online which, at that stage, was the country’s largest independent full-service digital agency. The WPP relationship has apparently been a big win for the company.

Native is one of South Africa’s largest integrated agencies. The company was formed from the merger of three South African specialist digital agencies: mobile specialists Brandsh, technology and content management specialists Cambrient and digital marketing, creative agency specialists Stonewall+.

The agency, which employs over 160 people, has done work for a number of international brands including Standard Bank, General Motors, Nestle, L’Oreal and Samsung.

The merger with VML will add extensively to that client list and will also boost the company’s BEE credentials as WPP empowerment Trust will hold a stake in the new business.

“This is a marriage of extraordinary capabilities. NATIVE is South Africa’s premiere full-service digital marketing agency and VML is now one of the world’s leading global digital brands,” said Schwartz. “This is a real stake in the ground for leadership in Africa — an unparalleled opportunity to give our clients consistent digital excellence that is seamlessly united with Y&R.”

Across the continent of Africa, WPP and its associates collectively generate revenues of US$700-million and employ over 28 000 people.