China's BlueFocus Acquires We Are Social
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Holmes Report

China's BlueFocus Acquires We Are Social

China's BlueFocus has stepped up its global expansion plans by acquiring We Are Social.

Arun Sudhaman

LONDON—China's BlueFocus has stepped up its global expansion plans by acquiring We Are Social, the UK firm that can lay claim to being the world's largest specialist social media agency.

BlueFocus, which has made no secret of its global ambitions, has acquired an 82.8% interest in We Are Social, for an initial consideration of $30m, "with further performance based consideration over a three year period."

The deal comes after We Are Social began the search for external funding in late 2012, as revealed by the Holmes Report, in a bid to fund its continued growth.

Founded in 2008 by Robin Grant and Nathan McDonald, We Are Social has grown to £35m in global turnover, counting more than 300 staffers across eight worldwide offices in Europe, Asia, Latin America and the US. 

The consultancy's fee income for its 2012 financial year was approximately £12m, with profits of around £2m on a 20 percent margin. Accounting for a predictable increase in the 12 months since (We Are Social's fee income grew to £20m for its 2013 fiscal year), Blue Focus' baseline valuation of the business at £22m does indicate a 'digital premium', if not a hefty one.  

In the process, the firm has won considerable recognition, including EMEA Digital Consultancy of the Year at the 2012 SABRE Awards, and sizeable social media mandates from such clients as Adidas, Heineken, Expedia, Heinz, Kia, and Indesit. High-profile work include its Marmarati effort for Marmite and Get Well Soup initiative for Heinz.

The agency will become BlueFocus' primary digital brand outside China, retaining the same management team and brand. Ownership of We Are Social was previously split equally between Grant and McDonald, who initially met while working at Tribal DDB.

Until now, We Are Social has financed its growth via existing client revenue, a scenario that does not appear to have unduly slowed its rapid expansion. We Are Social was one of many social media specialists to launch in London around the same time; none have matched its global growth. 

BlueFocus has grown in recent years to become one of Asia's largest PR agencies, reporting fee income of $88m in 2012. Earlier this year, the group completed an acquisition of almost 20 percent of UK PR holding company, Huntsworth Group. It was also named Emerging Markets Consultancy of the Year at the 2013 Global SABRE Awards.

"The partnership will allow us to continue investing in our brand and our culture, deliver increased scale and better infrastructure to our clients, and accelerate our mission to put social thinking at the centre of marketing," said Grant. “China is also central to both our and our clients’ plans for future growth, and the alliance with BlueFocus will give our clients unparalleled insight into this important fast-growing economy.”

BlueFocus CEO Oscar Zhao said that We Are Social "provides the perfect platform for us to expand our digital operations outside China." BlueFocus derives 50% of its revenues from digital activity, notably through its Blue Digital brand.

We Are Social was advised by Results International. Jim Houghton, a partner at the the M&A consultancy, hailed the deal as "a true shift in the powerbase of the global marketing services industry." 

"Together BlueFocus and We are Social will form the world’s fastest-growing marketing services group."

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