The part cash, part-equity deal will see Open Road’s 21-strong team merge into Blue Rubicon to create a business of around 200 people.
The terms of the deal were undisclosed, but there is no earn-out component in the transaction.
It is understood that Open Road will initially remain separate from Blue Rubicon and remain based in its existing London office, but that the two agencies will begin to work on projects and new businesses opportunities together immediately.
The transaction will bring dedicated public and regulatory affairs expertise to Blue Rubicon and boost the agency’s corporate and crisis comms offer. In addition to PA and corporate work, Open Road has also worked extensively across healthcare and employee engagement.
Blue Rubicon has always drawn on political expertise; its MD Chris Norton is a former Labour special adviser and the agency houses political campaigning arm Thirty Six Strategy, but it has not previously had a specialist public affairs offering.
"There are certainly common areas, but the two businesses have a different centre of gravity," said Blue Rubicon CEO, Gordon Tempest Hay. "We felt public and regulatory affairs expertise was something we needed as part of our armory."
He added: 'Through our partnership, we're bringing together two independent consultancies with a similar mindset, approach, reputation and strategic communications offer. It builds on a shared belief in joined-up communications across all channels as well as the shared history, going back nearly 15 years, of our respective directors.
"Without question, Open Road is the stand-out independent political and regulatory advisory firm in the market."
Graham McMillan, Open Road CEO, said that he had held discussions with a number of potential suitors, but said Blue Rubicon’s independence was a "major attraction" in that it offers the chance to play a central role in "creating and growing a group".
He added: "We set up the agency with a clear intention to provide integrated communications to clients with big and interesting issues and are proud of what we have achieved over the years.
"We believe we have found the perfect partner in Blue Rubicon – an agency which shares our values and has an outstanding reputation and client list. We are very excited about the synergies between the two agencies and about what we believe we can achieve together."
On the deal structure, Tempest Hay said that earn outs were "divisive" and created a situation where different parts of the business "scrap over income to hit artificial targets". He explained that the deal structure was ‘complex’, but the transaction centered on having a single P&L so the businesses work together towards the same goals.
Blue Rubicon sold a majority stake to private equity investor LDC in December 2012, valuing the firm at around £30m.
Since then the agency has opened offices in Doha and Dubai and is expected to open in further international locations in 2014.
Though Open Road only has London offices, Tempest Hay noted that the agency has undertaken significant work in Brussels and Washington.
According to PRWeek Top 150 figures, Open Road recorded £2.2m in fee income in 2012. It is understood that fee income for the financial year 2013/14 is likely to be around £2.5m.
