Omnicom chiefs plan to replicate AMV’s successful model globally
By JOHN TYLEE, campaignlive.co.uk, Friday, 04 December 1998 12:00AM
Omnicom wants to use the all-round communications experience of Britain’s Abbott Mead Vickers group as the launchpad for similar operations around the world.
As the US marketing group prepared to take full control of the UK company, of which it already owns 27.7 per cent, it emerged that Omnicom chiefs plan to reproduce the AMV model elsewhere.
Omnicom executives - who, contrary to some re-ports this week, have no plans to rename the agency BBDO.AMV - draw a sharp contrast between the limited offerings of the BBDO agency in New York and the broad range of the AMV group in the UK, whose interests range from advertising to contract publishing and from PR to sales promotion and sponsorship.
’It’s likely that some of the most successful players in the AMV group will take further responsibilities,’ a source said. ’AMV has a great stable of brands which opens up lots of strategic opportunities.’
For that reason, Omnicom is not expected to assimilate the AMV 'club' companies into the network, fearing that to tinker with the structure might affect the amount of referred business between the companies and the interdependence of subsidiaries.
Nevertheless, the deal is likely to result in greater synergy between the AMV and Omnicom subsidiary operations. This may manifest itself in closer links between AMV associated companies, such as the below-the-line specialists, Barraclough Hall Woolston Gray and Craik Jones and Omnicom’s Claydon Heeley, WWAV Rapp Collins and the newly merged Tequila Payne Stracey.
At the same time, the takeover could precipitate an eventual coming together of AMV’s media dependant, New PHD, and BMP Optimum, linked to the Omnicom empire via its BMP parent. ’It’s a possible way forward,’ an Omnicom source said.
The takeover is expected to result in a broader role for Peter Mead, the AMV group chairman, within the enlarged BBDO group.
The personal chemistry between Mead and John Wren, Omnicom’s chief executive, is said to have been a major factor in accelerating the deal.
As a result, Omnicom is likely to exploit Mead’s connections in the City, where he has long been seen as the acceptable face of the ad industry.
’Peter has no role within BBDO,’ an insider pointed out. ’It would make sense to make use of his City links.’
The deal could also lead to an extended role for Michael Baulk, the AMV chief executive, who is credited with laying AMV’s managerial foundations and whose experience may be exploited in other markets.
Under the deal - the largest undertaken by Omnicom in its 12-year history - AMV shares are expected to be valued at up to 450p, which would value AMV itself at about pounds 350 million.
That would make Mead’s 700,000 shares worth pounds 3.15 million while Adrian Vickers, another founding partner, would have his 900,000 shares valued at more than pounds 4 million. David Abbott, who retired as agency chairman in October, retains some incentive shares and will profit from the takeover.
Baulk has 800,000 shares, 600,000 of which are part of a deferred option scheme.
Omnicom’s move to take full control of the group, in which it took a major stake seven years ago, has long been anticipated, although industry sources say the bid has been been accelerated by the volatility of the stock market since July.
Industry observers say the takeover reflects the acquisitive mood among the major US networks, which have been riding high on a buoyant US economy and are looking to bolster business in North America and Europe to counterbalance problems with slumping Asian economies.
’The US networks not only have the benefit of enormous domestic markets that the UK can never match, but also of a strong economy that has been running bull for several years,’ one said. ’It gives them a tremendous advantage and means that, unlike the Saatchis in the 80s, they can hit the acquisition trail without piling up debt.’
The latest deal will give Omnicom the most formidable agency line-up in the UK, which includes not only AMV but BMP and TBWA. ’It’s a fabulous set of companies,’ an insider commented. ’So you can bet that Omnicom will proceed cautiously before trying to play around with them.’
December 1985 - Abbott Mead Vickers is floated on the stock market
January 1991 - Omnicom’s BBDO acquires 22 per cent stake in AMV
September 1991 - AMV group buys into the direct marketing agency, Barraclough Hall Woolston Gray
November 1991 - AMV buys the sales promotion agency, Momentum, for pounds 2 million
June 1994 - AMV buys a controlling interest in the investor relations company, Frew Macmaster
July 1994 - AMV buys the contract publishing company, Redwood December 1994 - AMV acquires the public relations agency, Freud Communications
January 1996 - AMV buys the PR consultancy, Fishburn Hedges Boys Williams, for pounds 15 million
May 1996 - AMV buys the media independent, Pattison Horswell Durden, for pounds 5 million. It is rebranded as New PHD
August 1997 - AMV buys the PR company, Aurelia
October 1997 - AMV buys the direct marketing agency, Craik Jones Watson Mitchell Voelkel
March 1998 - AMV sells its second-string agency, Leagas Delaney, for pounds 4 million to its management
This article was first published on campaignlive.co.uk
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