Bethesda marketer purchases two firms Snyder stock up $2.75 after buying ad agency, French drug specialist

Acquisitions

March 27, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Continuing its recent string of acquisitions, Snyder Communications Inc., a Bethesda marketing firm, said yesterday that it has bought a leading Boston advertising firm and a French pharmaceutical marketing agency.

Snyder bought Arnold Communications Inc., one of the nation's top 35 advertising agencies, in a stock deal of undisclosed value. Analysts estimated that Snyder paid about $120 million for Arnold.

In addition, Snyder concluded a $43 million stock purchase of Publimed Promotions SA of Paris, a move that expands Snyder's growing presence in the pharmaceutical marketing industry.

The acquisition of the two closely held companies will add about $140 million to Snyder's revenue this year, according to Clay Perfall, the company's chief financial officer. Snyder had just over $333 million in revenue last year.

Investors apparently approved the deals, sending Snyder's shares up $2.75 to $46.625, a high, on the New York Stock Exchange yesterday. Snyder's stock has more than doubled over the past year.

Perfall said the addition of Arnold, which was founded in 1946 and is perhaps best-known for its quirky national Volkswagen campaign, would spice up Snyder's marketing portfolio.

"Up until now, we were generally unable to provide creative, strategic services such as helping a client identify who they should be selling to and what their brand image is," he said.

Analysts said Arnold, which had $8 million in revenue last year, adds a variety of important assets to Snyder.

"Arnold brings new clients, for one. It also brings more creative services, such as interactive services, which Snyder doesn't now have," said Fran Blechman Bernstein of Merrill Lynch Inc.

Ed Eskandarian, Arnold's chairman and chief executive officer, said his company is looking forward to benefiting from Snyder's rising stock and aggressive acquisition strategy. "We're going to have a growth pattern that's going to expand thanks to the currency of their stock," he said.

Much of Snyder's growth has taken place in pharmaceutical marketing. The Publimed deal is just the latest in a series of buys that have catapulted Snyder into a leading position in the field.

In December, the firm capped off a year-long spree with the purchases of PharmFlex Inc. of Pennsylvania and the English firm Rapid Deployment Group Ltd.

"They entered this industry through acquisition. They had nothing before," said Victor E. Mandel, an analyst with Goldman, Sachs & Co. in New York.

Snyder has made its way in the pharmaceutical world by providing specialized marketing services to large international customers such as Eli Lilly & Co. Perfall, Snyder's chief financial officer, said the acquisition of a leading European firm like Publimed, which had $25 million in revenue last year, is part of that strategy.

"Our clients are global companies and they're looking for providers who can serve them wherever they are," he said.

According to analysts, outsourced medical marketing services are becoming more popular. "Pharmaceutical companies used to do all their marketing themselves," said Merrill Lynch's Bernstein. "Now, those companies are looking to focus on their core competencies. That's the trend."

Perfall said the Arnold and Publimed deals will not lead to job cuts in Maryland, where Snyder employs about 800 at its Bethesda headquarters.

Not including yesterday's acquisitions, Snyder has 9,000 employees overall, with offices in the United States and Europe.

Perfall added that Publimed and Arnold will likely continue to do business under their present names rather than be folded under the Snyder label.

Snyder may not rest long before it goes shopping again. "This company just happens to be incredibly aggressive with acquisitions. There's a lot of opportunity for rolling in additional acquisitions, and I would be disappointed if they slowed the pace," said Mandel.

Pub Date: 3/27/98

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