ScanGroup enters S. Africa market on buying PR firm
Mr Bharat Thakrar, the CEO of Scangroup. Photo/File
Scangroup has made its first entry into the South African market after the firm’s subsidiary bought a Johannesburg-based public relations agency.
Hill+ Knowlton Strategies Africa Holdings, which is owned 51 per cent by Scangroup, said it has acquired Corporate Communications Consultants for undisclosed fee.
The South Africa acquisition increases the number of fully-fledged African H+K Strategies offices to six and in line with Nairobi bourse listed Scangroup ambitions of increasing its footprint in the Africa and cut reliance on Kenya. Global communications firm owns a 49 per cent Hill+ Knowlton and 31 per cent of Scangroup.
“We are delighted about this announcement as it fits with Scangroup’s vision to be Africa’s leading integrated marketing communications group,” said Bharat Thakrar, Scangroup’s CEO.
Scangroup bought 51 per cent Ogilvy Africa in 2010 in cash and stock transactions worth $2.3 million that gave it minority stakes in eight media agencies across Southern and West Africa of between 6.4 and 15.3 per cent. The firm is keen to have significant stakes in communications firms that it owns.
Scangroup profits fell 17.4 per cent last year to Sh752 million and its share price has underperformed the Nairobi bourse over the past six months shedding 5.3 per cent in the period that seem most counters rise by double-digits.
Scangroup draws most of its earnings from advertising and media buying services but this segment has grown at a slower rate compared to public relations and other new services.
Advertising and media buying accounted for 79 per cent of Scangroup’s total revenue of Sh4.2 billion last year but the services grew by just six per cent.
Their performance contrasts with sales from PR and research which brought in seven per cent of the revenue each but grew 43 per cent and 40 per cent respectively, signalling higher growth potential.
In addition to H+K, Scangroup has a separate presence in PR services through its subsidiary Ogilvy Africa, one of the leading communications firms in the East African region.
Scangroup has been expanding new business lines including media planning, research, and digital/online marketing to reduce reliance on the mainstay advertising and media buying.
The company controls about 80 per cent of Kenya’s advertising booked through agencies, combining earnings from Ogilvy and the multiple agencies it owns directly such as Scanad, Thompson Kenya, and Red Sky
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