Sorrell strikes again. The much-talked-about deal finally landed on Sunday morning with the UK-headquartered global advertising major WPP, headed by ad baron Martin Sorrell, acquiring its US rival Grey Global. According to agency reports, WPP clinched the estimated $ 1.34-billion cash-and-stock deal beating the French contender Havas and the US-based private equity firm Hellman and Friedman.
The deal to gain control over Grey – the seventh largest advertising agency in the world, comes on the trail of Sorrell’s major acquisition moves in building WPP as the world’s second largest ad firm, roping in biggies like Young & Rubicam, Ogilvy & Mather and Cordiant Communications.
With the two ad majors uniting, the market is expecting some more action. While Unilever is one of the blue-chip clients of WPP, Grey, for long years, has been maintaining close association with P&G – the world’s largest advertiser. Perhaps a separate advertising network would help WPP maintain the fine balance with the conflicting accounts. Alongside Unilever, WPP’s roster of clients boasts of names like American Express, Ford and IBM, while Nokia, Warner Bros and Mars Inc would join the list with P&G from Grey’s stable.
As per reports, the immediate onus on WPP would be to work out strategies to boost Grey's profit margin that is reported to be considerably lower than the industry average. However, Grey chairman and chief executive Edward Meyer, who held 50 per cent of the voting power for the company, is in line for a large cash payment after the acquisition. It is unsure whether he would continue with his nearly 50 years of attachment with the group.