Publicis to buy Epsilon for $4.4 billion

French ad holding company Publicis said Sunday it would pay about $4.4 billion for marketing services company Epsilon to give it a leg up in digital marketing and to help clients better personalize their advertising.

The deal with Alliance Data Systems Corporation will entail Publicis acquiring its Epsilon business for a net purchase price of $3.95 billion after a tax step-up, with a total cash consideration of $4.4 billion. Publicis will form a strategic partnership with Alliance Data's remaining business.

The deal comes as the advertising industry reckons with the huge growth of digital advertising and the emergence of players like and Google . Digital ad spending was expected to surpass traditional ad spending in the U.S. for the first time this year, according to eMarketer, which also expects digital to account for more than two-thirds of all media spending by 2023.

The acquisition gives Publicis access to Epsilon's data capabilities. The company says, for example, it has more than 250 million unique consumers identified in the U.S. The company says it can build on top of a client's first-party data with its own assets, like behavioral and transactional data.

Major ad holding companies have grappled with whether to own data or to insource the data from providers. Last summer, Interpublic Group of Cos. agreed to acquire Acxiom's Marketing Solutions for $2.3 billion. Dentsu Aegis Network in 2016 bought a majority stake in data marketing company Merkle.

Companies like Epsilon or Acxiom would likely argue in an environment where privacy is increasingly important, their ability to ethically source and scrub data is valuable and important to marketers, said Forrester analyst Jay Pattisall after Publicis said last week it was in talks to buy Epsilon.

"As privacy becomes more and more of a concern for marketers and their customers, that capacity to balance precision marketing with customer and consumer privacy is a really important issue," he said.

Publicis also hopes the acquisition will also help it further personalize its connections with consumers.

"Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations," Publicis Groupe CEO Arthur Sadoun said in a statement. "The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative."

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