Huntsworth buys 90pc of Giant Creative in $72m deal

Healthcare and communications group Huntsworth announced on Tuesday the acquisition of 90.2% of the membership interests of Giant Creative Holdings - a limited liability company and parent of Giant Creative Strategy - from Shamrock Capital Growth Fund III and its affiliates, and Giant's former and existing management, for a cash consideration of $72.2m funded from existing debt facilities.

The London-listed firm said Giant, based in San Francisco, was “one of the largest” independent healthcare marketing agencies based on the US west coast.

It said it provides a full service, multi channel offering to its clients in the biopharmaceutical, medical device and diagnostics companies, through its 150-odd staff, and derived around 70% of its revenue from marketing to healthcare professionals - a “key growth area” for Huntsworth.

The board said that, when combined with its existing healthcare marketing agencies led by New York-based Evoke, the group would be “significantly” more competitive in responding to changing client demand that was seeking fewer but stronger partners to help access the spectrum of their marketing needs.

Giant's management team was led by founders Steven Gold as CEO and Adam Gelling as president, who would remain with the business and who would hold - along with other senior management - the remaining circa 9.8% of Giant Creative Holdings, which would be subject to put-and-call rights that would be exercisable in March of each calendar year from 2021.

The value of the put-and-call would be determined based on a multiple of Giant's earnings over the two-year period prior to exercise, subject to a cap of $25m in aggregate.

As a result, the maximum aggregate consideration payable by Huntsworth for Giant would be $97.2m.

Giant generated revenues of around $32m and EBITDA of $7m in the year to 31 December, with Huntsworth saying it expected the acquisition to be materially accretive to its earnings in the current financial year.

It added that Giant's gross assets were $26.1m as at 31 December.

Huntsworth would be entitled to settle any consideration due under the put-and-call either in cash, by the issue of ordinary shares, or by a mixture of cash and shares.

“Giant is a strong addition to the Group, bringing scale in healthcare professional marketing especially in the fast growth biotech sector and is led by an outstanding management team who will continue to be invested alongside us in the business,” said Huntsworth group chief executive officer Paul Taaffe.

“This expansion of Huntsworth makes it an even more compelling alternative to the large holding company networks.”