M&C Saatchi, the advertising empire built by the brothers behind Margaret Thatcher’s three election victories, has been tipped to swoop on rival firms overseas as it continues its international expansion.
The Aim-quoted firm, which brothers Charles and Maurice Saatchi set up in 1995 after selling their previous outfit to French rival Publicis Groupe, will this week unveil the fruits of its current overseas push.
A string of contract wins – including Abu Dhabi airline Etihad Airways and Commonwealth Bank of Australia – are expected to have helped grow half-year pre-tax profits to £8.6 million from £7.7m.
But analysts think M&C will make acquisitions to speed up its expansion. “The group has a strong balance sheet – with net cash of £19m at the end of this year – and we see scope for bolt-on acquisitions to supplement organic growth,” said Paul Richards and Gareth Davies at Numis Securities.
“In addition to building its global network clients, M&C continues to focus on developing high-growth businesses – notably mobile – in mature markets and scaling up in more attractive geographic markets,” the analysts added.
The United States could be one area in M&C’s searchlight after the firm appointed Jeff Brooks, former chief digital officer at rival Euro RSCG, as its chief executive in America.
M&C also hired Pierre Lipton, executive creative director at branding agency AKQA, which has worked with clients including car maker Audi, Sherlock Holmes filmmaker Warner Brothers and Microsoft on its Xbox games console. Lipton shifted from AKQA’s San Francisco base to become M&C’s chief creative officer in New York.
In America, the company has already won work from customers including Kellogg, Pfizer and Unilever, adding to a roster of clients such as British mobile phone brand O2, South African lender Nedbank and Australian telecoms provider Optus.
Davies and Richards also highlighted M&C’s push into advertising on mobile phones in mature markets, including the UK. Saatchi Mobile chief executive James Hilton recently said the cost of advertising on mobile phones is rising by 20 per cent a year.
“The group has enjoyed very strong momentum over the past two years, with organic growth of more than 20 per cent in 2011, following over 16 per cent in 2010,” Davies and Richards said.
“At its prelims, the group indicated that the new year had started well and reiterated this confident outlook at its June annual general meeting.”