Stagwell Group, the investment group started by former WPP and Microsoft executive Mark Penn, has acquired a majority stake in digital agency Code and Theory.
New York-based Code and Theory has worked with clients such as Dr. Pepper, Maybelline New York, Burger King and Vogue. The company creates digital campaigns for brands and has helped media companies redesign their websites.
Code and Theory’s specialty in creating large-scale web experiences “is something that’s going to be mission-critical for major products,” Mr. Penn said. “It’s a high growth agency with great founders, exhibiting a great combination of creativity and engineering.”
Terms of the deal weren’t disclosed. The agency has annual revenue of more than $50 million, according to a person familiar with the matter.
Mr. Penn, who also is known for his past political work as a pollster and adviser to Bill and Hillary Clinton, raised $250 million in funding last year to launch Stagwell Group. Former Microsoft CEO Steve Ballmer was among the investors.
At its launch, Stagwell Group said it had financial flexibility to make up to $750 million in acquisitions, with plans to invest in digital marketing services, advertising, research, data analytics and public relations firms.
“You’re going to see more purely digital acquisitions and this is the first of a line of them,” Mr. Penn said.
In October the company acquired the public relations firm SKDKnickerbocker, and a month later it purchased the National Research Group from Nielsen.
Stagwell Group is one of a new wave of players in the advertising industry seeking to challenge traditional ad holding companies by putting a range of assets under one umbrella.
Last year former Havas CEO David Jones raised $350 million to launch a new company, You and Mr. Jones, to make investments in early-stage tech companies. Private equity firms, consulting giants and smaller holding companies are among those competing with Madison Avenue’s traditional ad holding behemoths to buy agencies and digital companies.
Code and Theory was founded in 2001 by Dan Gardner and Brandon Ralph, who will both continue to hold a minority ownership stake in the agency. Code and Theory has more than 300 employees.
“We are a company full of creative people, not traditional businesspeople, and we believe Stagwell Group is the right partner as we continue to grow our firm and do great work for our clients,” Mr. Gardner said in a statement.