Leagas Delaney halts expansion

Leagas Delaney has admitted that its international expansion plans

are "on hold" following the collapse of its proposed takeover by the

Canadian marketing group Envoy Communications.

The collapse of the deal comes as Leagas Delaney grapples with the loss

of key clients including the BBC and Coca-Cola, as well as the cost of

moving to new, larger offices earlier this year.

Envoy and Leagas Delaney failed to agree on price, ending months of

uncertainty over the deal's viability since it was brokered last


Originally giving Leagas Delaney a value of pounds 62 million, the deal

floundered as a result of market conditions, which forced Envoy's share

price to fall and cut its capability to pay the proposed amount.

The deal with Envoy was designed to give Leagas Delaney new skills in

digital, design and retail specialism, as well as fund expansion into

new markets.

Already operating offices in the US, Italy, France and Germany, Leagas

Delaney planned to open two other regional shops in Japan and Spain with

the backing of its new parent. These plans are now on hold.

Leagas Delaney's chief executive, Tim Delaney, admitted: "The collapse

of the deal will slow down our ability to grow into new markets, but it

was never our intention to conquer the world overnight."

It is thought the agency's rapid international growth was in part funded

by major clients such as Adidas. Delaney refused to comment on whether

the agency had new buyers in mind, but said there would be no deal "for

the sake of it".

At the end of 1998, the agency was pounds 2 million in debt, which was

reduced to a net loss of pounds 159,000 for the year ending December


Earlier this year the company cut staff at its UK digital operations and

cut 40 jobs at its San Francisco office.

The agency is also committed to a financial repayment scheme with former

owner Abbott Mead Vickers BBDO, which holds a 30 per cent stake.

The Envoy deal would have netted Delaney about pounds 8 million for his

33 per cent stake, with chairman Bruce Haines taking pounds 6 million.