Agency share prices plunged this week in the wake of the Russian
economic crisis and fears of a global recession.
Abbott Mead Vickers plc, WPP Group and Saatchi & Saatchi all suffered
losses after the political crisis in Russia added to investors’ fears
over ongoing problems in several Asian economies.
AMV’s share price sank to a 1998 low of 218.5p on Tuesday, prompting
fears this may make it easier for BBDO to increase its stake in AMV.
Steve Waring, a partner at the accountancy firm, Willott Kingston Smith,
said AMV’s share price drop could make the agency more vulnerable to
’Abbott Mead’s shares were sailing at quite a high price with a high
price/earnings ratio,’ he said. ’This will make them more attractive,
but BBDO must be suffering itself.’
AMV’s shares rallied by 6p during trading on Wednesday morning.
Michael Baulk, the chief executive of AMV, said: ’You have to separate
the trading of a company from any buffeting that the stock market is
We are trading well at the moment and the current nervousness in the
market is unrelated to the way the company is performing.’
Other agencies were also keen to downplay the effects of the fall. ’I
don’t think this has much significance at all,’ Martin Sorrell, the
chief executive of WPP, said.
WPP’s share price stood at 327p as Campaign went to press on Wednesday,
33 per cent lower than its 1998 high of 488p.
Saatchis was trading at 101.5p by close of trading on Tuesday, just 1p
higher than its lowest price in 1998. Shares in Aegis and Tempus were
also down. Other media companies to sustain losses included News Corp,
which saw its share price fall 35p on Tuesday to 355.5p, close to its
1998 low of 333p.
Analysts said the fall in agency shares was unsurprising as it was in
line with the rest of the market.