LONDON: Blue Rubicon has bought public affairs specialist firm Open Road in the agency's first major acquisition since its injection of private equity cash in December 2012.
The part-cash, part-equity deal will see Open Road's 21-employee-strong team merge into Blue Rubicon to create an agency of about 200 people.
The financial 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 will stay in its 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 communications offering. In addition to corporate and public affairs assignments, Open Road has also worked extensively across healthcare and employee engagement.
Blue Rubicon MD Chris Norton is a former Labour Party special adviser, and the agency includes political campaigning arm Thirty Six Strategy. However, it did not previously have a specialist public affairs offering.
“There are certainly common areas, but the two businesses have a different center 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.”
Open Road CEO Graham McMillan said that he held discussions with a number of potential suitors, but Blue Rubicon's independence was a “major attraction” in that it offered the chance to play a central role in “creating and growing a group.”
“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,” he explained.
On the deal structure, Tempest Hay said earn-outs are “divisive” and create 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 about £30 million. Since then, the agency has opened offices in Doha and Dubai and is expected to expand to further international locations this year.
Though Open Road only has London offices, Tempest Hay noted that the agency has undertaken significant work in Brussels and Washington, DC.
According to PRWeek UK's Top 150 figures, Open Road recorded £2.2 million in fee income in 2012. It is understood that fee income for the financial year 2013-14 is likely to be about £2.5 million, or about $4.1 million.
This story originally appeared on the website of PRWeek UK.