Newco to merge trading services

By MATTHEW COWEN, campaignlive.co.uk, Friday, 27 July 2001 12:00PM

The senior management of Publicis and Cordiant have signalled that

Newco, the holding company set up to house the two agencies, will now

pool its negotiating resources across all media.



The UK-based entity will go further in the scope of its combined trading

than the Magna Global unit set up by Interpublic to handle TV

negotiations last week.



Newco will be 75 per cent owned by Publicis, with Cordiant taking a 25

per cent stake. Cordiant holds an option to sell its share to Publicis

for a minimum of £75 million, but Cordiant's chief executive,

Michael Bungey, said that it was unlikely to exercise this option.



"We are looking to get the benefit of scale in every activity of the

company," Bungey said of the negotiations plans. "It's important that we

establish a competitor position in terms of what we can do for our

clients."



"We'll be looking to go further," Optimedia's chairman, Simon Lloyd,

agreed. "What we do is likely not just to be TV buying but to cover

every aspect of the business."



Yet there are no immediate plans to move trading operations into a

separate, independent unit, as IPG has done with Magna. Bungey

emphasised that all operations will remain within the two agencies for

now, but hinted that the merger of agency units could come on to the

agenda.



"Now that the deal has been announced we can get down to sorting out

exactly how the company will be run," he said. "The question of what

might or might not be merged will largely come down to those

discussions. We have and will keep two brands, which is an important

element in handling conflicting business."



Several conflicting clients have seen their accounts brought into the

same holding company. Zenith handles Mars and United Airlines, while

Optimedia holds the Nestle and British Airways accounts.



Newco's management will be announced at the end of September. It is open

to appointing a chief executive from outside the agencies.



The merger followed Havas' bid for Tempus. "This is another step toward

consolidating into five or six global media companies," Zenith's

chairman, John Perriss, said.



This article was first published on campaignlive.co.uk

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