Another day, another minor statement of intent from WPP (LSE: WPP) (NASDAQ: WPPGY.US) on Tuesday as the advertising giant acquired another social media marketing specialist.
WPP shares climbed 1% to 1,330p during early London trade this morning following the announcement that Sir Martin Sorrell’s PR Machine had agreed to buy a majority stake in Volcanic, via WPP’s subsidiary GroupM.
Once again no financial terms were disclosed, but we were told that Volcanic had sales in the region of £2m last year, and assets of around £1m.
Naturally deals like this won’t move the needle at WPP, which is more than five thousand times the size of Volcanic by sales. But acquiring innovative young companies appears to be a crucial part of WPP’s strategy around the world, in regions and markets where it is willing to assimilate local expertise.
Volcanic are no slouches in their niche either. Founded in 2005, they already count Unilever, Dell and Standard Chartered among their clients. In an area as subjective as social media campaigning for local foreign audiences, it’s fair to say that Volcanic isn’t so much a business being acquired — but rather the hiring of an expert team of specialists.
And as I remarked in a similar article yesterday, while deals like Volcanic won’t budge WPP’s sales, it might tell us something about WPP’s long-term intentions to exploit and unlock value in these fast-growing markets.
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> Mark has no direct investment interests in the securities mentioned in this article. The Motley Fool has recommended shares in Unilever and owns shares in Standard Chartered.