PERSPECTIVE: The creation of BDM will start a ripple of global acquisitions

Well, what do we know? I was just sitting down to write a piece congratulating the Interpublic Group on tearing down the walls of conflict by acquiring MacManus, when those pesky Leo Burnetters steal the prize from under Phil Geier’s nose. Of course, at around dollars 1 billion it’s not such a steal, and Leo Burnett would probably not be able to do this without Dentsu’s extraordinary financial resources, but it’s a seller’s market.

Well, what do we know? I was just sitting down to write a piece

congratulating the Interpublic Group on tearing down the walls of

conflict by acquiring MacManus, when those pesky Leo Burnetters steal

the prize from under Phil Geier’s nose. Of course, at around dollars 1

billion it’s not such a steal, and Leo Burnett would probably not be

able to do this without Dentsu’s extraordinary financial resources, but

it’s a seller’s market.



So now we’ll never know if Procter & Gamble and Unilever had okayed

IPG’s takeover of MacManus (apparently so) or if Mars would be

sacrificed for Nestle (not clear). Instead, we have that rare

advertising event; an eminently sensible deal, with no immediate obvious

flaws regarding long-term future, client clashes or key personnel.

Unexpectedly, we now have a fourth mega holding company, temporarily

known as BDM, which is fascinating, both for the rationale behind each

party’s decision and for BDM’s innate potential.



MacManus was for sale. As a private company it could no longer compete

globally at the top level. It was both buoyed and restricted by being a

P&G agency - that is, until Cincinnati’s apparent change of heart on

conflict. The IPG idea was, initially, unlikely, but was getting

there.



The greater logic of a deal with Burnett was lost in the fallout of the

failed media merger.



Leo Burnett was no less pained by that failure. Its stake in BBH was

interesting (partly because a P&G agency bought a Unilever agency), but

small beer on the global stage. Dentsu’s 20 per cent stake in Burnett

was likely to be more significant, because it allowed the latter a

mid-term independent future as it bought up below the line and media

operations globally. But there was, inevitably, growing alarm at

remaining an independent private network in an increasingly vicious

global market.



And Dentsu? When I first became a marketing journalist there was an

organisation called HDM (Havas Dentsu Marsteller), an earlier attempt at

a global three-way partnership. It failed, of course, partly because the

western partners were not strong enough, but largely because back then

Dentsu also lacked the will - even the incentive - to crack the world.

Since then, the HDM break-up, the unsuccessful CDP purchase, the

globalisation of Japanese business, the first domestic Japanese account

moves and the Asian financial crisis have changed Dentsu’s world. It was

already planning to float in 2001. Now, locked in to this new

partnership, Dentsu may, at last, unleash its full potential beyond

Asia.



And so will BDM when it floats as a combined entity in 2001. This

apparent win-win deal creates a genuine challenger to the advertising

big three. Not, of course, that the big three will take BDM lying down.

There will be an almighty global acquisition scramble that will make the

events of the past week appear tame.



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