Cheil adds U.K. marketing firm FoundedCheil Worldwide, an advertising affiliate of Samsung Group, acquired a U.K. marketing firm in a move intended to expand its presence in overseas markets.
Cheil said on Tuesday that Iris, its subsidiary operating in the United Kingdom, took over Founded, a marketing agency based in London.
The announcement came at a delicate time, as it has been rumored that the Samsung affiliate is being sold off to French ad giant Publicis Groupe.
Cheil expects the acquisition of Founded to boost its business-to-business segment and help it enter overseas markets including the United Kingdom and United States.
“As the advertising and marketing market has been saturated and service quality standardized, corporate clients’ demand for marketing has increased ,” said Lim Dae-gi, president of Cheil Worldwide.
“We will create synergy with our business-to-customer sector and try to attract new clients.”
Founded, which was started in 2012, has recorded over 30 percent sales growth annually, according to Cheil.
The firm posted $8.7 million in annual sales last year and $2.2 million in operating profit.
Founded’s clients include SAP, Uniqlo and Sony.
Market analysts were positive about the buyout.
“The acquisition is in line with Cheil’s current strategy to scale with mergers and acquisitions,” said Ahn Jae-min, an analyst at NH Investment & Securities. “Cheil can leverage Founded’s expertise in business-to-business marketing.”
But the analyst noted that the purchase doesn’t necessarily play down the possibility of Cheil being sold to a bigger ad company.
“It is too early to say about the rumored deal in which Samsung plans to sell Cheil,” he said.
According to rumors, Samsung Group’s other affiliates - including Samsung C&T and Samsung Electronics, the two largest shareholders in Cheil - plan to sell their 28.44 percent stake to Publicis.
Cheil’s shares have been in decline since the rumor broke out earlier this year.
Bloomberg’s report in January that Publicis is considering a tender offer for a controlling stake in Cheil further instigated the speculation.
“The downward streak will continue until the rumors completely disappear,” Ahn said.
Cheil Worldwide denied the rumors and said nothing has been decided yet in response to a request for information by the Korea Exchange.
But at the time, Cheil hinted at some kind of negotiation as ongoing, saying that some of its major shareholders are negotiating multilaterally with foreign firms, but said that nothing has been confirmed.
BY PARK EUN-JEE [firstname.lastname@example.org]