Omnicom makes biggest ever acquisition with $900 million deal for Ascential’s Flywheel

Omnicom is to buy Ascential’s digital commerce business, Flywheel, in a $900 million deal that will be the biggest acquisition in the US agency group’s history.

Duncan Painter, the chief executive of Ascential, the UK-based parent company of Cannes Lions, will join Omnicom and run Flywheel, which claims to be the “largest addressable media buyer on Amazon”.

Flywheel has about 2,000 staff and works with about 4,500 brands. The Flywheel Commerce Cloud platform “manages tens of billions in product sales and billions of advertising spend annually across digital marketplaces”, such as Amazon, Walmart and Alibaba, according to the company.

John Wren, the chief executive of Omnicom, and Painter said the deal will mean the agency group can tap into the fast-growing, global digital commerce market, which is estimated to be worth $7 trillion by 2025, and combine Flywheel’s retail media capabilities with Omnicom’s data unit Omni.

In a separate deal, Ascential is to sell its fashion trends business, WGSN, to private equity firm Apax Partners.

Ascential had announced in January 2023 its intention to spin off its digital commerce arm in a separate listing on the US stock market, but the sale to Omnicom will come as a surprise.

Ascential said Omnicom is paying an enterprise value of £700 million ($900 million) to acquire Flywheel, while Apax is paying an enterprise value of up to £700 million.

Taken together, the combined enterprise value is £1.4 billion ($1.7 billion) and Ascential shareholders are set to receive £1.2 billion ($1.46 billion) – a huge return equivalent to 126% of the company’s stock market value before today’s double deal.

Ascential’s share price surged more than 35% in early trading on the unexpected news.

Wren said: “Ecommerce sales worldwide are set to increase by 50%, reaching about $7 trillion by 2025. The acquisition of Flywheel significantly broadens our reach and influence in the rapidly expanding digital commerce and retail media sectors, two of the fastest-growing parts of the industry.

“Together, we will seamlessly integrate our offerings across retail and brand media, digital and in-store commerce, and CRM, ultimately delivering superior results for our clients.”

Painter said: “By connecting Flywheel Commerce Cloud’s product and transaction data with Omni’s audience and behavioural data, we are poised to offer an end-to-end set of services that outpaces the competition.

“We aim to empower our clients to automate, optimise, and measure their digital commerce and media spend within an increasingly complex marketplace.”

Ascential separately confirmed that Phil Thomas, the chief executive of Ascential Events and the chairman of Cannes Lions, will replace Painter as chief executive of the remaining Ascential business, as the company first announced in January 2023.

Painter said: “Ascential's continuing business with its world-leading Events brands remains well-positioned to succeed as a high quality, independent UK-listed business."

Events delivered revenues of £213 million ($258 million) and adjusted Ebitda of £85 million ($103 million) in the past 12 months.

Ascential said at its half-year results earlier in the autumn that revenues from Lions increased 30% year on year and 40% versus 2019.

Scott Forbes and Mandy Gradden, currently chairman and chief financial officer of Ascential, respectively, will continue in their roles.