FCB welcomes merger into Interpublic stable

FCB senior managers reacted with relief this week at the news that

the network's True North parent is to join the Interpublic stable in a

pounds 1.47 billion deal.



As the agreement creating the world's largest communications group was

announced on Monday morning, executives were not hiding their delight

that True North was coming under the wing of a US group rather than the

Paris-based Havas.



'All the people here were rooting for Interpublic,' Harry Reid, FCB's

international president, said. 'Havas might have worked out but there's

a much closer cultural connection between the top guys here and at

IPG.'



But the marriage will have to go through an early pain barrier with the

possible closure of True North's Chicago headquarters - and resulting

job losses - likely to happen in order to satisfy the declared intention

of John Dooner, Interpublic's chairman, of making annual savings of more

than pounds 17.5 million.



The deal ends a period of speculation about the future of True

North.



It was heightened by last November's loss of FCB's dollars 1.5 billion

DaimlerChrysler business, which accounted for an estimated 25 per cent

of the group's profits.



'We had to show our clients and staff that we were in an end game,'

David Bell, True North's chairman and chief executive, explained. 'Now

all the speculation and 'what-ifs' are eliminated and we're focused on

our clients.'



As businesses converge, networks have found it increasingly hard to

provide the diverse range of marketing services the new mega-clients

demand in order to promote their brands cost effectively.



Bell, who becomes vice-chairman of Interpublic, said: 'Today's

multinationals have bigger needs than any single agency network can

provide. FCB, as a global network within Interpublic, can accommodate

those needs. True North could not have paid what Interpublic can afford

to give us the extra resources.'



Much is being made of the personal friendships between Dooner, Bell and

Brendan Ryan, FCB's chief executive, which stretch back more than 20

years.



What's more, Interpublic is singled out as offering more scale and

credibility than either Cordiant or Havas, both of whom have been in

talks with True North.



By throwing their lot in with Cordiant, some FCB chiefs feared they

might simply be helping to prop up a fractured structure with

problematic operations in the UK and the US. Meanwhile, Havas provoked

memories of True North's disastrous marriage with France's Publicis and

concerns that another cultural divide might open up.



Publicis still holds more than 9 per cent of True North's stock, a

legacy of the two groups' bitter divorce four years ago. A failed

hostile bid by Publicis for its former global partner only exacerbated

the bad feeling.



Maurice Levy, the Publicis chairman, who is examining options with the

group's financial advisors, this week cast himself in the role of

spectre at the feast, labelling the Interpublic offer as 'peanuts'.



Levy's view is that True North has only itself to blame for its

predicament.



He told Campaign: 'The sale of the company is the result of the wrong

strategy and a series of mistakes. What's been offered is a price with

no premium. It's unheard of. I've never seen a company offered to a

competitor without a premium. It's very disappointing.'



There are concerns also that FCB, whose multinational clients include SC

Johnson and Compaq computers, does not add enough prestige or diversity

to Interpublic's existing network line-up of McCann-Erickson and the

Lowe Group. But, as one FCB chief remarked: 'When you're the size of

Interpublic, extra diversification becomes very difficult.'



In Europe, FCB relishes what it believes is the potential for

cross-referred business that the deal will bring as well as the extra

resource to develop a network ,which still languishes in the lower

reaches of the top twenty rankings.



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