DraftWorldwide Buys Capita to Boost Back-End Services

DraftWorldwide continues its expansion spree with the acquisition of an undisclosed majority interest in Capita Technologies, a 9-year-old company that specializes in end-to-end e-commerce services.

The purchase is intended to leverage DraftWorldwide's marketing, direct response and database strengths with Capita's experience in developing business strategies, supply-chain integration and e-commerce functionality for clients.

“I like to call this the strange bedfellows of the new economy,” said Jordan H. Rednor, the New York-based president and chief operating officer of DraftWorldwide, Chicago, “because in the past we would never really have deep relationships with business solutions people or technologists. But more and more today it's an important perspective for us that we haven't had before.

“Most of our interactive expertise is front end or Web strategy and design, and online advertising,” Rednor said. “This takes us a whole step further into ways to work with our clients to develop solutions that integrate technology to a greater extent than they have in the past.”

The deal is DraftWorldwide's fourth in a month. Less than two weeks ago the agency absorbed fellow Interpublic Group shop Lowe Lintas Columbian. And before that it bought event marketing and promotions agency Groupe III Promotions Inc. and youth entertainment and technology shop Sloan Group.

Capita, Chicago, has built more than 1,200 Web sites. Its clients include Morgan Stanley Dean Witter, Xerox Corp., EarthLink, Glidden Paints, Hachette Publishing, Johnson Controls and GE Capital. It has offices in eight cities nationwide.

Both DraftWorldwide and Capita refused to disclose the financial terms of the deal. Capita will operate as an autonomous unit of DraftWorldwide. Jeff Kvam will continue as Capita's president/CEO, although he will relocate along with senior management to New York.

A casualty of the deal is the Capita name, which will be dropped in the near future for another that is yet to be disclosed.

Capita last year recorded consulting revenues of $40 million, with projections of $70 million in 2000. But it operates in a highly competitive market that includes Scient, Viant, iXL, Razorfish, Naviant and even management consultancies such as Andersen Consulting and Ernst & Young.

Allying with DraftWorldwide — which posted 1999 billings of $2.7 billion through clients such as General Motors Corp., American Express Co., Compaq Computer Corp. and Kellogg Co. — strengthens both Capita and the direct marketing behemoth's electronic customer relationship management offerings.

“We found that the skill set that Draft and then Interpublic Group can bring to the table now puts us in a position from a business point of view where we have capability where we had been weak,” Kvam said. “More than just scale, it's core competency.”

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