Japan's Dentsu acquires 51% stake in ad agency Taproot; deal es

• Posted by Sindhuri G August 29, 2012 - Filed in Business - 2,074 views

  MUMBAI: Japanese advertising behemoth Dentsu has acquired a 51% stake in Taproot, arguably the most creative among the Indian independent advertising agencies.

  With several of the most popular recent campaigns like 'Har Ek Friend Zaroori Hota Hai' and 'Joh Tera Hai Who Mera Hai' for Airtel and 'Change the Game' for Pepsi under its belt, the three year seven month old has seen a meteoric rise. It's also won critical acclaim; the most recent being a Gold Lion at Cannes along with Ramesh Deo Productions for the 'I Am Mumbai' film for Mumbai Mirror, a newspaper from the Times Group, which also publishes The Economic Times.
  
  The managements at both Dentsu and Taproot declined to discuss the financial aspects of the arrangement. Industry observers estimate the initial upfront payout at Rs 60 crore with another Rs 80 crore expected in future earn-outs.
  
  In a global deal in July, Dentsu had paid $4.9 billion for British media buying group Aegis, valuing the company at 12 times its earnings before interest, taxes, depreciation & amortisation.
  
  The Economic Times had reported in June that Dentsu among other agency groups was speaking to Taproot about a possible acquisition. Says Rohit Ohri, executive chairman, Dentsu India group, who has previously worked with one of Taproot's founders Agnello Dias at JWT: "They (Taproot's co-founders & chief creative officers, Dias and Santosh Padhi) could have chosen anyone. What convinced them about Dentsu is that we are very entrepreneurial and evolving; and more willing to look at out of the box ways of working."
  
  Adds Dias: "We felt it was the right thing to do. Of all the conversations we had, we felt most comfortable with the equation we were sharing with Dentsu.
  Another reason cited is Dentsu's global strengths in the digital medium and that it is currently the leading network in Asia.
  
  Taproot will retain its identity and won't be rebranded. Although Dentsu is a majority owner, management control of the agency continues to rest with Dias and Padhi. Says Padhi, "In terms of changes, there's nothing in the pipeline. I think even Dentsu is saying 'why should we upset a system that's doing so well'?"
  
  What the arrangement brings Taproot is integrated communication, superior execution abilities and a national network. As far as Dentsu is concerned, Taproot, says Ohri, "is really the creative firepower we needed in the group." However, the firepower is not likely to be immediately applied to any of Dentsu's current client relationships.