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Grey Worldwide in buyout mode

25-August-2004
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Grey Worldwide in buyout mode

Advertising major Grey Worldwide India is set to acquire a healthcare and a sales promotion company to kick start its affiliated businesses.

Currently 30 per cent of the company’s revenues comes from its affiliated specialist divisions such as healthcare, public relations and event management while the rest comes from traditional advertising.

Nirvik Singh, chairman, Grey Global Group South Asia, said that the two companies were well known names in their space but declined to divulge their identity and details of the deal.

“We are at the final stage of negotiations. The deal will be struck in the next 30 days,” he said. Grey India has estimated billings of Rs 400 crore.

“We have an existing healthcare business but we are looking at making it larger by acquiring a healthcare company,” he added.

A lot of agencies today are good at above-the-line activities for pharmaceutical companies but the bulk of pharma companies’ advertisement budget goes into doctor detailing, seminars and conferences, Singh said.

“By next year it will probably be mandatory to do clinical trials in India to get foreign investment approvals. Grey Healthcare globally is in a good position to guide our Indian counterparts to do stuff like that,” he said. The other buyout is to enter the sales promotion space where Grey does not have a presence.

The affiliated specialist divisions account for 30 per cent of Grey India’s revenues. The ideal ratio would be 50:50, Singh said.

“The categories are not growing and there is only that much in terms of budgets that people can keep spending. Earlier, agencies used to ignore the non-traditional services because 90 paise of the ad rupee used to come to traditional advertising. Now, it’s not more than 60 paise,” he said.

The trend favouring specialist divisions like healthcare and events management is here to stay, Singh said.

“We are seeing signs of bundling back agency functions in a few parts of the world. Agencies have woken up to the fact that this is the future and have hence invested in that,” he said.

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