What goes around comes around. This isn't the first time a Poster Publicity (PPL) merger with Portland Outdoor has been on the cards. In February 1995, Sir Martin Sorrell, the group chief executive of Portland's parent company, WPP, walked away from a similar deal. He had been on the verge of signing a cheque but the price, he realised at the 11th hour and 59th minute, just wasn't right.
We are not even at the 11th hour this time around - the process of due diligence has only just started - but the outcome will almost certainly be different. A decade on and WPP is much keener on the whole notion; and this time around the deal will be structured as an earn-out, rather than WPP paying all the cash up front.
It is proposed that WPP/Portland will acquire 50 per cent of PPL, the existing directors will retain the rest and a joint venture company will be formed. At present this operation is being referred to as NewCo but a way will be found to retain some reference to the heritage of one or both of the existing companies.
The deal is interesting for what it says about WPP's ambitions in this market. But it has wider implications too - it represents another significant stage in the outdoor consolidation game and will doubtless trigger further activity in the market.
The last round of activity was also triggered by WPP, when it moved all the outdoor billings of the newly acquired CIA into Portland. WPP has forced the pace in this market because it keeps challenging the received wisdom that big advertising holding companies do not necessarily have to own their own outdoor specialists as adjuncts to their media planning and buying capabilities.
WPP is still the only major with a coherent policy with regard to outdoor (see box), with the rest content to appoint specialists on an opportunistic basis. They certainly see no need to exert direct control.
WPP wants - demands - its own global network of market-leading outdoor specialists. It also seeks buying clout and, indeed, this deal will give NewCo a UK market share in excess of 31 per cent (although less than the 40 per cent claimed by PPL insiders).
As Alex Thompson, the chief executive of Portland, puts it: "The idea is to create a merged company with a new structure designed to deliver best-in-class planning and buying in major markets globally, maximising complementary skills and systems for the benefit of our clients."
Unfortunately for Thompson, the deal is seen in many quarters as an indictment of Portland's performance under his command.
As one observer puts it: "He's not been a trailblazer for the company like Dennis Sullivan (Portland's previous boss) was. He has not resolved structural differences with MindShare, which has taken bits of planning back. Meanwhile, Portland has slowly but surely been losing its non-WPP business.
"I'm sure Alex will be given a role over the short term because the idea will be to ensure a smooth transition, both from a client point of view and a public relations point of view but I think everyone expects the PPL management will run the show."
Recent business lost by Portland includes COI Communications, Estee Lauder, Boots and The Daily Telegraph. And those structural problems with MindShare have been similarly unfortunate. Especially as, according to inside sources, Sorrell has become increasingly impressed with what's been happening at Posterscope.
The Aegis-owned specialist now has the strongest global network to date, including market-leading operations in major markets. It is number one in the UK, for instance, with a share of around 45 per cent (or 36 per cent if you believe PPL).
Sorrell has, it is thought, been impressed by the way Posterscope has built its network, partly though acquisition and partly by restructuring (and rebranding) outdoor expertise that already existed within the Carat network. PPL's team, led by its founder, Eric Newnham, will now be expected to do something similar within WPP. And he will be presumably be given more leeway than Thompson to knock heads together at MindShare if he meets resistance.
Overall, however, Newnham faces a big challenge. Portland's global network has withered in recent years (it was previously strong in faraway markets such as India) while PPL's, although strong in the Far East and reasonable in the US and South America, is not as strong as it would like to make out in Europe.
But you could argue it is now poised to take pole position - given that Grey is up for sale. A change in Grey's ownership could result in Posterscope losing the MediaCom (a Grey subsidiary) business it currently handles. And once the Grey deal is done, the next big company likely to come into play is Aegis itself. Aegis being snapped up by one of the major holding companies would certainly set the cat among the pigeons.
It might be time for Omnicom and Publicis to reassess their ad hoc approach to outdoor. Interpublic, too, for that matter. It has a planning operation called IPM, with buying going through Helix, a joint venture with Alban Group; but that relationship will be threatened if and when the focus falls on Alban as the biggest remaining independent in the outdoor market.
And it will, won't it? Don't jump to conclusions is the message from Alan Simmons, the chairman of Alban - although he does admit that the coming months are likely to be interesting.
He concludes: "This is all good news from our point of view and there will be some exciting opportunities, not least following the fall-out of business that is likely to happen as a result of the Portland-PPL merger. But as to the future, I can't believe there isn't going to be a role for an independent company such as ourself."
OUTDOOR BUYING POINTS
Owned by Aegis
Share 45 per cent
Buys for Aegis, Grey (MediaCom), Omnicom (OMD), Publicis
Proposed 50:50 joint venture
Owned by Portland/WPP and PPL
Share 31 per cent
Buys for WPP, Publicis (Starcom)
Joint venture between IPM/Interpublic and Alban, a private company that
owns the Concord poster specialist
Share 20 per cent
Buys for Interpublic
Share 4 per cent