Publicis (PUBGY) announced it has entered into an agreement with Alliance Data Systems (ADS) under which Publicis will acquire Alliance Data's Epsilon business for a net purchase price of $3.95B after tax step-up - total cash consideration of $4.40B - and build a strategic partnership with Alliance Data remaining business.

The Directoire, or Management Board, and the Conseil de Surveillance, or Supervisory Board, of Publicis have unanimously approved this transaction. Arthur Sadoun, Chairman and CEO of Publicis, said that, "Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative."

Edward Heffernan, Alliance Data Systems' President and CEO, added that, "I'm pleased to say today's announcement represents a trifecta win for Alliance Data, Epsilon and Publicis Groupe. The announcement of this transaction represents theculmination of an extensive assessment of strategic options for our Epsilon business. With this transaction, we have found what we believe to be the right home for Epsilon's technology, data assets and associates. Publicis Groupe will be the ideal cultural and strategic fit for Epsilon and its Conversant business, and will help drive Publicis Groupe's own transformation in today's data-driven digital world. Furthermore, the unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward."

Under the terms of the agreed transaction, Publicis will acquire Epsilon for a cash consideration of $4.40B, representing a net purchase price of $3.95B after deducting the benefit of acquisition-related tax step-up. This implies an 8.2-times multiple, based on a 2018 Adjusted EBITDAof $485M. According to Publicis, the transaction will be double digit accretive to its headline EPS and free Cash Flow per share from year one. Publicis also said that it "remains committed" to its 45% dividend payout ratio and will put on hold its share repurchase program in the context of this acquisition. The transaction remains subject to customary approvals and is expected to close in Q3 2019