MediaCom to merge with TMBG in pounds 28m deal to create top ten shop

Grey’s UK media dependent, MediaCom London, is to merge with the Media Business in a deal announced this week that will create a top ten media agency with claimed billings of approximately pounds 333 million.

Grey’s UK media dependent, MediaCom London, is to merge with the

Media Business in a deal announced this week that will create a top ten

media agency with claimed billings of approximately pounds 333


The deal, which comes after nearly a year of talks, sees MediaCom Europe

acquiring the outstanding shares in the Media Business Group in a move

that values TMBG at pounds 27.9 million. The newly merged company will

be called MediaCom TMBG and will be based in TMBG’s new offices in

London’s Gower Street.

Allan Rich, the chairman and chief executive of TMBG, will take over as

chairman and chief executive of the new company, while TMBG’s managing

director, Steve Allan, and MediaCom’s managing director, Andy

Troullides, will be joint managing directors of the new set-up. Rich and

Allan will between them take a 10 per cent stake in the enlarged


Alexander Schmidt-Vogel, the chairman and chief executive of MediaCom

Europe, said: ’The merger combines two companies with complementary

strengths, a true sense of partnership and the entrepreneurial drive to

reinforce our position in the top tier in the highly competitive

European media market.’

The new operation will open for business early in the new year and will

have a client portfolio that includes MediaCom’s Procter & Gamble,

SmithKline Beecham and Mars business, and TMBG’s Book Club Associates,

Direct Line and Warner Brothers accounts.

There are a number of possible client clashes thrown up as a result of

the merger, including MediaCom’s Sun Life and TMBG’s Direct Line,

MediaCom’s Warner Brothers Films and TMBG’s Polygram Films and

MediaCom’s SmithKline Beecham and TMBG’s Roche.

Allan said there was little serious client conflict. The two companies

are talking to clients about the detail of the merger and assuring them

of continuity of service. ’It’s a big job and our priorities are our

clients and staff,’ Allan explained.

The new agency is claiming billings of almost pounds 500 million, which

would put it in third place in the league table behind Carat on last

year’s billings. However, TMBG has lost more than pounds 50 million in

business so far this year and has picked up just over pounds 12 million.

The latest figures from MMS, for the year ending September 1998, give

the two agencies combined billings of pounds 333 million.

Rich said that by pooling billings ’the merger will enhance our

negotiating power and our investment in key areas such as research, that

add value to the services we provide to our clients’. Allan added:

’We’ve harboured an ambition to be number one and that’s still our

ambition. Now we’re closer to it.’

MediaCom had been looking for a UK partner to add volume to its local

proposition. It has been slipping down the league tables and is only

just inside the Top 15, according to the latest figures from MMS.

Troullides said: ’We have been looking for a partner for growth in this

mature and competitive market. TMBG with its skills set and exceptional

market position made it an ideal choice.’

Negotiations between the two companies began early this year but were

abandoned at the beginning of October after large falls in equity

markets worldwide. TMBG’s share price had fallen to 72.5p from a high

over the past year of 136.5p. The high was sparked by TMBG’s

announcement in the spring that it was in acquisition talks, though a

statement signalling the end of talks in October sent shares


Now MediaCom is paying 107p per share, a 40 per cent premium on the

closing price at the beginning of this week of 76.5p.

Allan said talks had been renewed very recently and that a final

decision to push ahead with the sale was taken quickly. ’The two

companies are a good fit and meet each other’s objectives. It’s like a

relationship, you split up and then get back together and make it work

because it feels right.’

The acquisition of TMBG is the latest in a series of purchases by

MediaCom around the world, including Effcom - the largest independent

media services company in Sweden - and a new joint venture with Canada’s

Media Buying Services. MediaCom now claims global billings of more than

dollars 8 billion and has 76 offices around the world.






Mars (Galaxy, M&Ms, Milky Way)

Procter & Gamble (press buying)

SmithKline Beecham

Time Warner

Warner Brothers


Book Club Associates

Direct Line

Great Universal Stores







1993: MediaCom launches out of Grey’s media department. Grey’s media

director, Nigel Sharrocks, takes over as chairman and Andy Troullides

joins from Burkitt Weinreich Bryant as general manager

1994: Sharrocks becomes managing director of Grey

1995: MediaCom launches as a global network

1996: MediaCom wins SmithKline Beecham’s pounds 34 million centralised

media account

1998: MediaCom Europe acquires TMBG to create pounds 333 million media



1975: Allan Rich launches TMBG

1991: TMBG launches Bullett Media with HHCL & Partners

1993: A sale to GGT dissolves at the 11th hour

1995: 30 per cent of TMBG shares are successfully floated on the Stock


1996: The Media Business North launches

1997: The Media Business Scotland launches

1998: TMBG sells to MediaCom, valued at pounds 27.9 million.


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