Media services company ScanGroup has signalled an intention to acquire majority shareholding in a South African marketing company in a deal that could further spread its footprints on the continent.
The company Monday announced plans to acquire majority shares in Experiential Marketing (Proprietary) Limited (EMPL), a firm that has clients in a dozen sub-Sahara Africa countries.
Completion of the deal, whose exact value has not been made public, is subject to approvals from regulators including the Competition Authority of Kenya and the Capital Markets Authority.
“Completion of the acquisition is subject to various conditions contained in the agreement including regulatory approvals,” said Richard Omwela, a director of ScanGroup, in a regulatory filing.
The announcement comes months after ScanGroup said it is on the hunt for more acquisitions on the continent, armed with the Sh1.8 billion war chest it received from its parent firm WPP last year.
British group WPP, also known as Cavendish BV, last year increased its stake in ScanGroup to 50.1 per cent through a cash and shares deal.
ScanGroup has in the past said it will use the money to buy controlling stakes in marketing firms in countries such as Angola and Mozambique, in line with its Pan-African expansion strategy.
“We obviously cannot sit on the cash,” said Bharat Thakrar, the ScanGroup managing director, early this year. The Nairobi bourse-listed firm already has minority stakes in media services companies in Zimbabwe, Namibia, DR Congo, Senegal and Cameroon.
EMPL currently has 1,700 staff. Last year, it reported revenue of Sh1.63 billion earned through a special form of marketing called experiential.
According to Creative Guerrilla Marketing’s website, experiential marketing is a form of advertising that “focuses primarily on helping consumers experience a brand.”
“The goal of experiential marketing is to form a memorable and emotional connection between the consumer and the brand so that it may generate customer loyalty and influence purchase decision.”
ScanGroup has a Kenyan subsidiary (Roundtrip Limited) which also offers this brand of marketing, field marketing and even management.
However, Roundtrip, a wholly owned subsidiary of the ScanGroup founded in 2003, does not have a strong presence in Sub-Saharan Africa hence the need for EMPL’s acquisition.
ScanGroup last year earned a net profit of Sh867.3 million, 15 per cent higher than the Sh752 million it posted in 2012.