LIVE ISSUE/GGT UNDER ATTACK: Manhattan merger mystery that led to GGT crisis - P&G’s pull-out from Wells BDDP has roots in the GGT takeover, Karen Yates says

Last week was hell for Michael Greenlees, chairman of the GGT group.

Last week was hell for Michael Greenlees, chairman of the GGT


News that the mighty Procter & Gamble had fired its New York office -

Wells BDDP - sent shock waves around the world. Analysts drastically

marked down profit forecasts, its share price plummeted by a third, and

predators - smelling a cheap and vulnerable buy - began audibly to lick

their lips (Campaign, 23 January).

So what went wrong at Wells BDDP? Greenlees is no stranger to the wiles

involved in keeping top clients happy. And yet he let P&G - one of the

world’s most loyal, lucrative and conservative clients - slip through

his fingers.

Insiders say the crisis blew up from nowhere, and ran out of control

before top BDDP management, who all live outside the US, could get a

grip on it. They add, moreover, that to understand fully why things went

so wrong, we have to go back to 1995.

The story of what was then Wells Rich Greene reads like the most lurid

of television soaps - power, money, intrigue and the whiff of financial

scandal. In its heyday, Wells was one of New York’s hottest agencies but

decline - or, to be more exact, stodge - began to settle in. It was an

ailing Wells that the French network, BDDP, led by its charismatic

chairman, Jean-Marie Dru, purchased in a wave of expansionism in


Dru gave his new possession time and space to improve, but by 1995 he

had lost patience with Wells’ energetic but unfocused chairman, Ken


Olshan was particularly close to Wells’ flagship client, P&G. And it is

said that P&G never forgave the French for the way Olshan and his

president, David Sklaver, were ousted. Olshan was given his marching

orders over a Jewish holiday, and Wells was tardy in settling with him.

Even worse, the agency publicly accused Sklaver of financial

irregularities and was forced a few months later to admit that he did

not ’knowingly engage in wrongful conduct’.

Nevertheless, the new chairman, Frank Assumma, got off to a hopeful

start, hiring the P&G veteran, Paula Forman, as his president and

Britain’s Doug Atkin as his planning guru. The trio put a moratorium on

new business, a policy that reaped rich rewards as the agency put on

some dollars 120 million in billings from existing clients.

Then came bad times for BDDP. The debt-laden network was put up for

sale, and it became difficult to hang on to good clients and people.

Still, the Assumma-Forman-Atkin triumvirate carried on, until, to the

relief of all, Greenlees - an adman not a banker - came to the


He managed to persuade the bankers and shareholders to support a daring

bid to buy BDDP lock, stock and barrel for more than pounds 100 million.

It was a deal that would catapult the newly merged empires of GGT and

BDDP into 15th ranking in the world (Campaign, 20 September 1996).

Ironically, it was from that time that things began to go badly wrong

for Wells. Assumma - always a patrician - became more proprietorial

about Wells’ clients after GGT’s arrival, insiders say. And he started

to cross swords with Forman.

Three months later, and quite separately, Wells’ executive creative

director, Linda Kaplan Thaler, left to do her own thing. More ominously,

she was followed at the beginning of December last year by Forman

herself and, a few weeks afterwards, by Atkin.

P&G was not pleased. The Cincinnati-based conglomerate, it is said,

began to feel jerked around by first the French and then the Brits. In

December, it summoned Greenlees to an urgent meeting and, despite

buoyant sales on two of the three P&G brands in Wells’ stable, gave him

an ultimatum: sort out your personnel problems or go. Six weeks later,

Wells was fired.

As one ad executive put it: ’P&G has an image of being very rational,

very based on numbers. But sometimes it acts very irrationally. Like a

baby, it wants to stamp its little feet.’

Whatever caused the final break, the loss of P&G is more than just the

departure of a client. Although representing only 6 per cent of GGT’s

worldwide income, P&G makes up 26 per cent of Wells’ revenues. It was

the rationale for being in overpriced Manhattan, the nice little earner

that allowed Wells space to breathe, and its departure is hardly a vote

of confidence for other potential clients.

Gone, too, is Greenlees’s chance to woo P&G to other parts of his


But perhaps the most chilling aspect of this fiasco is what it means for

the GGT group as a whole.

Despite a very solid set of half-year results, the P&G news wiped a

devastating 39 per cent off shares, leaving it a potential bargain for

predators. ’It is very vulnerable,’ Lorna Tilbian, a media analyst for

Panmure Gordon, admits. ’Given time and space it will recover. But at

this stage in the cycle I don’t know if people will give it that.’

Omnicom, Publicis and WPP are all reported to have made contact with GGT

since P&G’s withdrawal, and news of these talks has been enough to lift

the share price back to pounds 1.80 this week from its low of pounds

1.23. But a sellout would mean the end of dreams of a global network for

Greenlees, at least on this occasion. And for Dru, who has gone to hell

and back trying to keep the BDDP network intact, it would be the end of

the road as a self-made man.

Perspective, p14

Leader, p23.