The process to sell Grey began last June, when it started talking to banks about its future. WPP agreed to buy the company, which owns Grey Advertising and MediaCom, in September 2004, offering $1.3bn (£680m) for the company.
However, because of WPP's rising share price the deal is now estimated to be worth more than $1.7bn (£890m) -- some $472m of which will go to Grey's chairman and chief executive Ed Meyer.
Meyer has signed a new employment agreement lasting until the end of 2006, but this agreement then automatically extends for successive one-year periods, unless he provides three months' notice that he plans to quit.
He retains the title of chairman and chief executive officer of Grey, but will take a pay cut, with his basic salary falling from $3.65m annually to $1m.
Grey, founded in 1917, will continue to operate as a separate entity within the WPP Group.
The merger was delayed by the European Commission, which requested more paperwork from the companies as it examined the issue of competition within the media buying industry after the deal. The EC cleared the merger on January 24.
WPP will remain the second-largest advertising holding company in the world, but the deal means it is closing the gap on number one company Omnicom Group. Combined revenues for WPP and Grey would have been £4.9bn last year, while Omnicom Group's revenues were £5.1bn.
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