Acquisition of Carlson Marketing to create big loyalty player
Major potential implications for clients of merged operation
Canada-based Groupe Aeroplan (GA), the international loyalty management corporation has entered into an agreement to buy global loyalty marketing services provider Carlson Marketing.
The merger raises the issue of what the implications of a merged operation could be for clients of the two companies who may be rivals operating in the same markets. GA owns Canada’s Aeroplan loyalty programme as well as Nectar, the UK multi retailer loyalty scheme.
The acquisition will include all Carlson Marketing’s agencies across 17 countries. It has its strongest presence in the US with 11 offices including Los Angeles, Chicago, Detroit and New York. Carlson also has offices in Europe, Asia and the Middle East, and works for AT&T, Nokia, Amtrak, the Radisson hotel chain and Muller.
GA also owns 60% of Rewards Management Middle East, the operator of Air Miles programmes in the United Arab Emirates, Qatar and Bahrain in addition to UK-based LMG Insight & Communications (I&C), which provides communication and retail data analysis to supermarket chain Sainsbury’s and over 100 FMCG suppliers.
The net purchase price for US-based Carlson Marketing from parent group Carlson Companies will be US$175.3m (Cdn$188.0m), including transaction costs of US$6.5m (Cdn$7.0m) and subject to certain working capital adjustments.
Groupe Aeroplan says the acquisition of Carlson Marketing will secure an important footprint for it in the US, the largest consumer market in the world. It added that the transaction provides Groupe Aeroplan with immediate geographic diversification and accelerates the company’s international expansion strategy into the G20 countries.
GA says the purchase will create a major global loyalty player by bringing together its own expertise in operating coalition loyalty programmes and data analytics, with privately-owned Carlson Marketing’s knowledge of loyalty marketing services and events engagement and management.
Carlson Marketing designs and delivers loyalty, engagement and event programmes for some of the world’s best known brands. Its two global service offerings – Brand Loyalty and Engagement & Events – are supported by six core capabilities: Strategy & Brand Planning; Creative and Communications; Decision Sciences; Award Services; Technology Services and Customer Service. Headquartered in Minneapolis, MN, it has large regional offices in Toronto, London and Sydney.
The acquisition is subject to customary closing conditions and antitrust approvals in the United States and Canada, and is expected to close by early December 2009. It will be financed with cash on hand and bank facilities.
Aeroplan has been pursuing an aggressive expansion strategy this year, and is looking to acquire companies in countries where it does not already have a presence.
The former Air Canada subsidiary, which is now an independent publicly traded company, said in May that it would either buy minority stakes in existing frequent-flier firms, acquire a struggling company in the sector, or combine small loyalty programmes into larger coalitions.
In July Aeroplan announced plans to launch of a new coalition loyalty programme in Italy in 2010, that would be modeled after the Nectar scheme which Aeroplan purchased two years ago from Loyalty Management UK. Aeroplan says it has already signed up a number of retail partners for the programme, which will be 75% owned by Aeroplan.
Commenting on the Carlson Marketing acquisition Rupert Duchesne, president and CEO of Groupe Aeroplan, said: “This acquisition is a logical extension for our company, as we diversify our business model to include a broader range of services within the loyalty management space in the US and internationally.”
“Acquiring a proven leader in the loyalty marketing space is the most cost effective and timeliest route to broadening our loyalty services offering. Carlson Marketing is widely recognized for their innovative thinking when it comes to understanding consumer behaviour, rewards and data analytics, areas that are pivotal to driving future growth in the global loyalty arena.”
Groupe Aeroplan’s businesses and Carlson Marketing will continue to operate separately and independently. Carlson Marketing’s management team, led by president and CEO Jeff Balagna, will continue to run the operations.