For those who like that sort of thing, Ammirati Puris Lintas losing
Rover Cars to M&C Saatchi offers a renewed opportunity for speculation
on APL merging with the fellow Interpublic and General Motors network,
the Lowe Group. According to these people, IPG insiders are already in a
deep state of communion with merger advisors and a marriage, if not
imminent, is being actively considered.
A merger has financial validity, as True North, which believes it will
save dollars 25 million as a result of the FCB-Bozell merger, will
testify. But should we be reaching for the safety pins and the sewing
thread just yet?
There is really only one man in possession of a definitive answer: IPG’s
chairman and chief executive, Phil Geier. No, make that two and add Gene
Beard, IPG’s financial director and Geier’s closest advisor. Neither are
the kind to appreciate a mischievous request for comment, however, and
the call comes back that ’Mr Geier is outta town’. Local managers are in
the dark and the two network heads, Martin Puris and Frank Lowe, flatly
deny the story. In any case, it is their fiduciary duty as major IPG
shareholders to do so.
So, apart from ’economies of scale’ (which spells redundancies), what
could be the motivation behind a merger? First, both APL and Lowe have
suffered from management problems and business losses in their New York
network headquarters where Geier is close at hand. Also the Lintas
merger in 1994 with Ammirati & Puris has turned out to be a marriage of
convenience between a creative New York agency with global aspirations
but scant network experience and Unilever’s house agency which was
suffering from an account-shorn bottom line.
Then there is the multinational issue. Lowe has recently lost its most
significant multinational client, UDV, to J. Walter Thompson. Unilever,
Nestle and Johnson & Johnson, meanwhile, form the bedrock of APL’s
client list. APL can’t break out of its position as Unilever’s house
agency and Lowe, the acquisitive younger network, can’t make the leap to
serious multinational status via organic growth.
And then there is the culture thing. Every merger throws together teams
of managers who have spent their working lives beating hell out of one
another and this one would be no different. Other businesses can explain
away defensive mergers by the soaring costs of research
(pharmaceuticals) or by excess capacity in key markets (cars) or by the
uncertainties of technological change (telecoms), but advertising has
its own rules. Lowe has its haughtier-than-thou creative pedigree, and
APL has its pragmatic FCMG background. The culture clash looks huge but
the financial validity argument looks pretty convincing too.
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