WPP Group will set new management for Grey Global Group when its completes its $1.52 billion purchase of Grey.
WPP will keep Grey separate from its other ad brands Ogilvy Group,
J. Walter Thompson and Young & Rubicam, and plans to keep J. Brown Agency as a division of Grey rather than fold it into another WPP-owned promotion agency. There has been speculation that WPP might fold J. Brown into Einson Freeman or into 141 Worldwide, which WPP got as part of its August 2003 purchase of 141 parent Cordiant Communications. But “every indication that we’ve gotten is that Grey and its units will stay intact,” said J. Brown CEO Tim Dorgan. “I assume there will be more resources for us once this all comes to fruition. Until then, it’s business as usual for us.”
WPP can minimize client conflicts by keeping Grey separate from its other ad agencies. The biggest concern is that work for Procter & Gamble, Grey’s top client, could conflict with WPP work for Unilever.
WPP will hire a chairman-CEO of Grey to oversee its divisions about six months after the purchase closes; until then, Grey’s current president-CEO, Ed Meyer, will act as chairman-CEO. Meyer will stay on for at least two years as part of the purchase agreement and will be offered a seat on WPP’s board after Grey’s new chairman-CEO is hired. No closing date has been announced.
London-based WPP cited five reasons for buying New York-based Grey, whose revenues topped $1.3 billion in 2003. First, Grey brings ad clients in new areas, especially P&G but also 3M, Chase, Conagra, Hasbro, Mars and Warner Bros. Second, the purchase strengthens WPP’s relationship with existing clients including, BAT, Diageo, Nokia and Pfizer. Third, Grey adds expertise in advertising, media investment management, healthcare, direct and interactive, sales promotion and p.r. Fourth, Grey’s Mediacom media-buying arm extends WPP’s scale in media buying. Lastly, Grey bumps up WPP’s presence in fast-growing Asian and Latin American markets.
WPP’s bid reportedly beat out Havas and a joint bid by private-equity firms Kohlberg Kravis Roberts & Co. and Hellman & Friedman.
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