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Sid Lee acquired by Kyu, Hakuhodo DY Holdings

The agency will remain headquartered in Montreal and maintain its leadership

Sid Lee has been acquired by the Japanese holding company Hakuhodo DY Holdings.

The deal, announced Monday, will see Sid Lee join Kyu, Hakuhodo’s New York-based collective of companies, which also includes Digital Kitchen, Red Peak and SYPartners. Sid Lee is the fourth company to join Kyu and its largest acquisition to date.

Financial terms of the acquisition were not disclosed, though Sid Lee chairman Bertrand Cesvet referred to them as “excellent.”

“Sid Lee is a high value asset. It’s one of the few creative [agencies] that is really integrated and of a fairly large scale,” Cesvet said.”The deal is a very good deal. They paid a good price.”

Sid Lee will continue and expand as an agency brand and maintain its head office in Montreal. Each of the agency’s 35 partners will continue on with the company, as will its management. According to Cesvet, there will be no personnel changes as a result of the acquisition.

“Nothing changes. Sid Lee remains Sid Lee. There’s no Hakuhodo name on the door  – we’re going to be run exactly as we are and we’re going to grow.”

“For us it’s really an acceleration project,” he said. “It’s about taking Canadian talent, growing it, and growing the importance of Sid Lee as a global brand.”

As part of Hakuhodo and Kyu, Sid Lee’s immediate plans are to grow its presence in the U.S. The agency first opened in the U.S. in Austin in 2011, but soon closed down the office after losing Dell as a client. The next year, it bounced back and opened in New York, then moved into the L.A. office of its client Movember late last year. There are plans to open an office in L.A. independent of Movember by the end of 2015.

In the long term, Cesvet said there are plans to grow Sid Lee throughout Asia, where Hakuhodo has a major presence. He also pointed out that one of the agency’s most important clients, Samsung, is headquartered in Seoul.

Over the next five years, the intent is to “multiply” the number of Sid Lee offices with the stated goal of doubling “as quickly as possible.”

Hakuhodo’s deep roots in Asia were one of the main factors in Sid Lee choosing to sell to it, Cesvet said. In the past, Sid Lee has fielded a number of offers from other potential buyers, but Cesvet said the western holding companies were not a fit for its plans. Instead, Hakuhodo was attractive because it has a strength in a market Sid Lee has yet to reach. Conversely, Hakuhodo has a desire to grow in North America and is making Sid Lee a major part of those plans.

“For us, this is building the next chapter of our business. Our ambition has always been to develop and grow Sid Lee into a global network,” said Cesvet. “I think we’ve gone really far down that path – we have six offices around the world. We think this partnership will enable us to reach the next level and become the Canadian-based global network we want to build.”

Prior to the acquisition, Sid Lee was one of Canada’s few large independent agencies. Between 2000 and 2005 Caisse de Depot owned a partial stake in the company and in 2012 Cirque Du Soleil, a long-time client, also purchased a partial stake.

Following the deal, Cirque du Soleil will remain a “commercial partner” of Sid Lee. According to Cesvet, Cirque du Soleil received both cash from the transaction as well as incentives to stay on as a partner.

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