Digitas Inc. Signs Agreement to Purchase Medical Broadcasting Company
Wednesday, 04 January 2006
Digitas Inc. announced that it has signed a definitive agreement to acquire Medical Broadcasting Company (MBC), a healthcare interactive marketing agencies in the country. The closing of the transaction is subject to certain conditions and approvals including the purchase of a third party's minority interest in MBC and is expected to be completed in the first quarter of 2006.
MBC will retain its brand identity, operating as a third agency of Digitas Inc., which includes Digitas LLC and Modem Media, and will be led by its existing leadership team, which includes David Kramer and Linda Holliday.
Founded in 1990, MBC specializes in the creation of innovative, integrated marketing programs for clients in the pharmaceutical, biotechnology, and medical devices industries. MBC services include digital marketing strategy, web analytics, online media planning and buying, search engine marketing, creative design, web development, video production, and relationship marketing.
Its current client roster consists of many of the largest healthcare organizations in the world, including 8 of the top 10 pharmaceutical companies as ranked by worldwide healthcare revenue.
"MBC's wealth of industry expertise in both professional and patient communications is a complement to our strategy of targeting the healthcare and pharmaceuticals marketplace," said David Kenny, chairman and chief executive officer, Digitas Inc.
MBC co-founders David Kramer and Linda Holliday said, "We've enjoyed long-term relationships with a blue-chip roster of healthcare and pharmaceutical companies. Now, thanks to a doubling in consumers' use of the Internet as a medical information source and its ranking only behind care providers as the most credible source, on-line marketing is ascending to become a new leading media channel for healthcare. Many of our clients are preparing to advance their businesses' online strategy to address this and we see tremendous benefit in being affiliated with the robust digital marketing capabilities found in the Digitas Inc. family of agencies."
The privately-held MBC expects fee revenues of $23 - $25 million for the year ending December 31, 2005 and is profitable. MBC has 140 employees at its office in Philadelphia.
Under the terms of the purchase agreement, the total purchase price will be determined on a three year earn-out arrangement and will be paid in a combination of cash and stock. An initial payment of $30.4 million comprised of $22.4 million in cash and $8 million in Digitas Inc. common stock will be made at the time of closing. The calculation and payment of the earn-out will be based upon MBC's future financial performance achieved through December 31, 2008.
Digitas Inc. expects to discuss the acquisition following the transaction's close. Digitas Inc. said it anticipates the deal to be financially accretive to its earnings in 2006.