Global IT services provider, Accenture plc (ACN - Free Report) recently completed the acquisition of a majority stake in SinnerSchrader AG, one of the leading digital agencies in Germany. The move is part of Accenture's efforts toward enhancing its digital marketing capabilities in Germany. The agreement was announced on Feb 20, 2017.
Having started its journey in 1996, SinnerSchrader over the years has graduated into one of Europe’s leading digital agencies, focusing primarily on the design and development of digital products and services. The agency, which went public in 1999, has about 500 employees working across its offices in Hamburg, Berlin, Frankfurt, Munich, Prague and Hanover. Its leading clients include Allianz, Audi, BMW, comdirect bank, ERGO, Telefonica, TUI, Unitymedia and VW.
Per the agreement, Accenture had agreed to buy 62% of equity stake in SinnerSchrader from co-founder and CEO Matthias Schrader, CFO Thomas Dyckhoff, and other shareholders at €9 per share. Apart from this, the company intends to make a public tender offer to acquire all the remaining shares at same price.
SinnerSchrader will join the Accenture Interactive platform, a part of the company's digital marketing-services arm, Accenture Digital. Accenture Interactive was formed in 2009 to deliver superior consulting, technology and analytics services to chief marketing officers (CMOs).
The integration of SinnerSchrader’s expertise and global reach will help Accenture in enhancing its Interactive capabilities. According to Brian Whipple, head of Accenture Interactive, “We are combining the scale and reach of the world’s largest digital agency with the creativity, digital expertise and keen market knowledge of a leading digital agency in Germany.”
Enhancing Digital Capabilities
Since the formation of Accenture Interactive, the company has made significant acquisitions to enhance its digital marketing capabilities, including the acquisition of Reactive Media, an Australian digital services provider and Brightstep, a Swedish digital content and commerce solution provider.
In November last year, Accenture acquired privately held U.K.-based creative advertisement agency, Karmarama, a full-service digital agency. In Apr 2017, Accenture acquired a majority stake in IMJ Corporation. Prior to that, Accenture acquired AD.Dialeto, Pacific Link and Chaotic Moon. These acquisitions are part of the company’s efforts to bolster its digital marketing capabilities globally.
We feel, the acquisition of SinnerSchrader will further help Accenture to provide end-to-end digital marketing services, which will bring a deeper and broader set of digital solutions to its clients. Notably, SinnerSchrader will be Accenture’s 10th acquisition globally under its Interactive platform since 2013.
Considering the growing need for digital marketing, we expect Accenture’s investment in digital and marketing capabilities to boost long-term growth. It will also help the company in effectively competing with other digital marketing service providers such as International Business Machines Corp. (IBM - Free Report) , Dell and Deloitte.
Accenture’s long-term prospects look promising due to its sustained focus on new and innovative product launches, continuous investments in enhancing digital and marketing capabilities, as well as major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.
Notably, shares of Accenture underperformed the Zacks categorized Consulting industry over the last one year. The industry gained 3.6% compared with the stock’s return of just 0.7%.
The stock currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader technology industry are Broadcom Limited (AVGO - Free Report) and Micron Technology, Inc. (MU - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Broadcom and Micron has a long-term expected EPS growth rate of 13.6% and 10%, respectively.
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