Zacks_Analysts' Blog : WPP Group Acquires TAXI - Analyst Blog

Ireland-based advertising titan WPP Group plc (WPPGY), through its wholly-owned subsidiary, Young & Rubicam Brands, acquired the assets of TAXI Canada, Inc., in Canada. In addition, share capitals of TAXI’s subsidiaries in the United States and the Netherlands were acquired for an undisclosed amount.

Young & Rubicam Brands is primarily engaged in advertising; branding and identity; direct, digital, promotion and relationship marketing; health care communications; public relations and public affairs.

The acquired company, TAXI, based in Toronto, is one of the leading innovative and creative networks worldwide and employs over 350 people. In the 12 months ended June 30, 2010, it earned a revenue of CAD$53.7 million while gross assets were roughly CAD$25.4 million. The acquisition of TAXI will enable WPP Group to fortify its existing client base with improved services; thus fitting well into Young & Rubicam Brands’ existing 30 companies.

In its third quarter 2010 trading update, WPP Group reported a top-line growth of 12.2% year over year, with results well above the Zacks Consensus Estimate of US$3,470 million. Based on its success in the first nine months of 2010, management predicted that its full year 2010 margin would exceed the company’s margin target of 1.0%.

The company faces competition from its peers like Interpublic Group of Companies, Inc. (IPG), Omnicom Group Inc. (OMC), and Publicis Groupe SA (PUBGY). We currently maintain an Outperform recommendation on the company.