SBJ/April 1-7, 2013/Marketing and Sponsorship

Spire looking to sell Just Marketing stake

Spire Capital Partners is shopping its majority stake in Indianapolis-based Just Marketing International, the motorsports agency that works across Formula One, NASCAR and IndyCar.

The private equity group, which bought 50 percent of the agency five years ago, hired Rothschild Group to put together a sales book and approach potential buyers. The other owners of Just Marketing International include Credit Suisse, which owns 10 percent; WPP, which owns 20 percent; and the agency’s founder and CEO, Zak Brown, who owns 20 percent. Those owners have the option to retain their respective stakes in the agency or sell their positions along with Spire.

Brown
“We’re a private equity fund, and this is a deal going on five years,” said Bruce Hernandez, a partner at Spire and the chairman of JMI’s board. “That’s a natural cycle for us. We’re out raising our next fund. You exchange shareholders. That’s what you do. JMI will continue to exist and continue to be the biggest, baddest agency focused on motorsports out there. We’ve done well with JMI. It’s performed well. This is just what you do.”

Said Brown, “Spire has been a fantastic partner for our business and delivered a ton of value. It’s natural for a private equity company to sell its interest in a business after a few years. For us, it’s business as usual, and we’re excited about the future.”
JMI was founded in 1995 in Indianapolis. It employs more than 100 people across offices in Indianapolis, London and Hong Kong.

The sales effort comes five years after Spire bought its majority stake in JMI. It also comes at a time when the national merger and acquisition market has improved from recent years, as evidenced by rival bids to acquire computer maker Dell and by Berkshire Hathaway’s purchase of H.J. Heinz Co. Whether the sports market, specifically, has similarly rebounded is less clear. Phil Anschutz recently pulled his company AEG off the market, and IMG is in the early phases of a sales process that is expected to fetch more than $1.5 billion.

JMI is small compared with both those deals. Sources familiar with Rothschild’s sales book said JMI last year claimed earnings before interest, taxes, depreciation and amortization of $8 million. WPP’s acquisition of 20 percent of the company in 2011 valued it at more than $80 million.

Hernandez said Spire, which also owns the Professional Bull Riders, Velocity Technology Partners and six other companies, is selling JMI because it is winding down its second fund and starting a third. It acquired JMI as part of the second fund and has recently sold other companies it bought with that fund, including heavy equipment auctioneer AssetNation. He added that Spire is testing the market and exploring its options with JMI.

“We could keep it,” Hernandez said. “We could sell our interest. … Maybe you sell a piece of it. It’s not a black-and-white thing.”

Hernandez declined to say when the sales process began.

In recent months, sources said, Rothschild has approached private equity groups and holding companies to gauge their interest, including Omnicom and Interpublic Group.

Hernandez said if another holding company wanted to acquire the agency, WPP would most likely sell its stake.

A WPP spokesman said WPP’s “attitude” toward retaining or selling its stake in JMI “depends on who purchases Spire Capital’s share, if it is sold at all.”

Sources who have reviewed Rothschild’s sales book said it emphasizes the success JMI has had in building its international business, particularly in F1, where it brokered a five-year, $200 million deal for UBS to become a series sponsor in 2010. It also underscores the sales success and relationships Brown has amassed over the years.

But sources familiar with the sales process said Brown is in the last year of his contract at JMI, and recently, his name has popped up for other jobs. Hulman & Co., which owns the IndyCar Series, confirmed it approached him to become the CEO of a new motorsports division, and British papers have put him on a short list to succeed 82-year-old F1 CEO Bernie Ecclestone. He has been considering selling his home in Carmel, Ind., outside JMI’s headquarters in Indianapolis, and moving to London, where JMI’s business has expanded in recent years.

Hernandez declined to discuss the details of Brown’s contract but said Brown was committed to the agency.

“He’s an integral part of the business,” Hernandez said. “Any buyer interested in JMI would be interested in retaining Zak. You can presume Zak will stay with JMI.”

Brown said he remains committed to JMI but declined to comment further on his contract or his future.

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