WPP set to become world number one with Y&R purchase

WPP is set to steal Omnicom’s position as the world’s largest advertising group, with estimated revenues of dollars 6.69 billion, as its acquisition of Young & Rubicam nears completion.

WPP is set to steal Omnicom’s position as the world’s largest

advertising group, with estimated revenues of dollars 6.69 billion, as

its acquisition of Young & Rubicam nears completion.



A formal announcement is expected in time for Y&R’s AGM this Friday.



A prompt closure of the transaction is desirable as the value of the

deal, tied to WPP’s share price, has tumbled from a weekend high of

dollars 5.3 billion to dollars 4.5 billion on Wednesday.



Anthony de Larrinaga, an analyst at SG Securities, said: ’If it goes on

too long, pressure increases from the other side (Y&R) to

renegotiate.’



A factor believed to be delaying the signing is the creation of new

employment contracts for the 49 Y&R executives eligible for big pay-offs

if they left after the merger - a point that led the talks to falter

last month.



Y&R’s chief executive, Tom Bell, is likely to stay on in the short term,

though not in the WPP chairman role he had been offered.



The two parties are understood to be informing clients of the takeover

plans. Ford, a major international client for both groups, is thought to

smile on the proposals as the intervention of the car giant last week

caused a proposed merger between Y&R and Publicis to falter.



Ford said it would not accept the Publicis tie-up as the French network

handles the business for the rival car giant Renault.



It has yet to emerge how the takeover will effect the two networks’

media companies. Y&R’s the Media Edge, founded in 1998 has strong

planning credentials but a limited buying function in many markets.

WPP’s MindShare has highly developed planning and buying operations.



A deal would be likely to see the Media Edge’s buying needs handled by

either MindShare or a new, stronger Media Edge with boosted buying

credentials; a move that would hasten the termination of any agreements

between the Media Edge and Media Planning, which has historically

handled substantial amounts of buying for the Media Edge in Europe.



It will be the second time that WPP’s chief executive, Sir Martin

Sorrell, has been at the helm of the world’s largest advertising group:

WPP first took the title in 1989 when it bought Ogilvy & Mather.



The change could trigger a rush of mergers as holding companies fight to

consolidate while there are still relatively small networks available to

buy. Omnicom, which owns the DDB, BBDO and TBWA networks, may choose not

to forgo its number-one status for long.



The Interpublic Group, the third-biggest group in the world, owns only

two networks - Lowe Lintas & Partners and McCann-Erickson - since it

merged Lowe and Lintas last year.



Interpublic’s attempts to acquire the MacManus Group were foiled when

MacManus did a surprise deal with Leo Burnett and Dentsu last year.



True North (which owns the merged FCB and Bozell networks), Saatchi &

Saatchi; Cordiant (which owns Bates and half of Zenith Media), and Grey

Advertising are all players which must either acquire or be

acquired.





WPP



1985: Sorrell leads team that buys Wire and Plastic Products



1987: WPP buys J. Walter Thompson



1989: WPP buys Ogilvy & Mather



1991: Economic slump leads to near-receivership



1997: WPP forms MindShare.



Topics

Become a member of Campaign from just £46 a quarter

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk plus get exclusive discounts to Campaign events

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an Alert Now

Partner content

Share

1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).