Chiefs bid to save Red Cell and HHCL merger

Network chiefs are working to save the deal that would make HHCL & Partners the centrepiece of WPP's Red Cell operation.

The talks are understood to have become bogged down by the complexities of the share-swap arrangements involving WPP and the protracted due diligence process caused by the disparate group of agencies in the Red Cell network.

Both sides are keen to reach agreement by the end of the year and stop the rising embarrassment of negotiations still lingering, four months after Campaign revealed they were taking place.

This week, all parties were agreed on the need to end the uncertainties and the importance of concluding the merger before the end of the year.

"A lot of the delay has been caused by the configuration of the share deal," a Red Cell source said.

Chime insiders say the problem is agreeing the worth of HHCL, whose value as a brand is deemed greater than its indifferent financial performance over the past year would suggest.

"We're all still very enthusiastic about the deal," a Chime source said.

"But this isn't a straightforward acquisition and the construction is a complex one."

The merger will create a new UK agency with the probable title of HHCL Red Cell. HHCL senior managers are expected to occupy the key posts in the merged operation, which will incorporate what remains of Red Cell's UK operation. The new agency will share new offices with Red Cell's global headquarters.

Red Cell, set up in January 2001, links the former Conquest European network with Singapore's Batey Advertising, Seattle's Cole & Weber and Berlin Cameron in New York. Under its chief executive, Lee Daley, it aims to become the most creatively radical of the WPP networks and ally more closely with the entertainment industry.


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