RXP Services has entered into an agreement to acquire The Works, a Sydney based digital creative agency in a move that “extends RXP’s digital services delivery capability” and will increase the firm’s presence in NSW.
The move sees RXP tapping into a greater brand strategy and creative delivery, which the company expects will strengthen client relationships and generate new cross-sell revenue opportunities.
RXP did not disclose the value of the acquisition, but the Australian Financial Review claimed RXP paid $25 million dollars up front for the company, “with more available to The Works' vendors under a two-year earn out agreement”.
The company said the purchase was to be funded with a mix of capital raise, company cash reserves and debt facilities.
RXP chief executive Ross Fielding said the acquisition made sense for the IT firm.
“It’s a really strong fit with RXP’s evolving business model as we continuously seek to grow our digital services offering. The future is about digital, and the acquisition of The Works significantly enhances our capabilities in this area,” he said.
“In addition to extending RXP’s already strong digital customer experience delivery capability, it also increases our presence in NSW and further diversifies our customer and revenue base. We strongly believe this acquisition will allow a deeper level of client engagement and, therefore, drive greater client engagement. My team and I are really excited by this acquisition and look forward to joining forces as we continue our evolution.”
The Works co-founder Damian Pincus said the acquisition of his company came at a time when the marketing communications business was facing disruption.
“Clients increasingly want to engage with consumers at a deeper and more personal level and as digital transformation specialists RXP have a wealth of experience in this area. This is an exciting partnership and will complement our core brand strategy and creative offering enabling us to further deliver for our clients and people,” Pincus said.
The ASX listed IT services company entered a trading halt on Tuesday morning. The company expects to solicit further information surrounding the capital raising needed in order to support the purchase before the end of the week, after which the the trading halt will cease.