Mustoes bids to recoup stake

Mustoes is attempting to buy itself out from its deal with the Japanese advertising giant Hakuhodo.

The agency is in final negotiations with Hakuhodo to buy back the 80 per cent share it owns. A decision is expected at a Hakuhodo board meeting next week.

Hakuhodo bought a 49 per cent stake in the then Mustoe Merriman Levy in 2002 in a bid to strengthen its position in the UK and create a bridgehead for expansion into Europe. It upped its stake to 80 per cent three years later.

A source close to the agency said Mustoes' senior management was frustrated at its owner's failure to invest in similar agencies across Europe. "Hakuhodo got cold feet and didn't start buying. There's no strategy and no European footprint," the source said.

If the Hakuhodo board agrees to the proposal, Nick Mustoe, the Mustoes chief executive, would become the majority shareholder in the company. Hakuhodo is expected to retain a small minority stake, however.

Hakuhodo is the second-largest advertising group in Japan after Dentsu, and has 70 offices in 16 countries.

Last March, TBWA\Worldwide and Hakuhodo launched a joint venture in Tokyo called TBWA\Hakuhodo.

Mustoes declined to comment and Hakuhodo did not return calls.