WPP Haves, Havas Not: Grey Deal Leaves Havas Sixth In A Race Of Six

And then there were six - major agency holding companies that is. And soon, if Wall Street speculation is correct, there may be only five. With the ink barely dry on WPP's acquisition of Grey Worldwide, the financial press was already speculating that the next biggest holding company, Paris-based Havas, might be vulnerable to a takeover itself after failing to mount a successful bid to acquire Grey.

In fact, WPP's $1.5 billion deal to acquire Grey, is greater than the $1.4 billion market capitalization of Havas' publicly traded shares, based on Friday's closing stock price of $4.68 per share.

The deal also places Havas in sixth place in a six-way race toward the global consolidation of the worldwide advertising services marketplace, behind U.K.-based Aegis Group, the parent of Carat, and the only pure-play media services company in the sector.

At the top of the heap are Omnicom, parent of the OMD and PHD media networks, with a market cap of $12.9 billion and WPP, the parent of the Mediaedge:cia and MindShare media networks, which is expected to be close to a tie with Omnicom's market cap, once the deal is absorbed by Wall Street investors.

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While WPP did not announce plans for integrating Grey's assets into the WPP organization, some observers expect Grey's MediaCom Worldwide unit to be merged into Mediaedge:cia, the weaker of WPP's two media networks, which would emerge as a major powerhouse, especially in the U.S. media buying marketplace. That decision ultimately is expected to be made by Irwin Gotlieb, the powerful chief of WPP's Group M unit, which oversees WPP's media service operations.

How fast any changes would be made in the organizational structure of these agencies and how it might impact Grey employees is not clear, but as Grey chairman Edward Meyer implied in a statement, many of those employees are closely tied to important client relationships.

"Grey's greatest asset is its people, and while the ownership structure will change, our day-to-day business relationship with our clients will remain unchanged and our commitment to do great work will continue to be our passion," he said, implying that the merger might be a good thing for Grey executives, "By agreeing to combine with WPP, our clients will be able to access a broader array of global services and tools, and our employees can expand their careers in exciting directions."

But the merger with WPP could also further dislodge some off those client relationships. Grey already was on shaky ground with one of its biggest clients, Procter & Gamble, before the deal was announced, and some observers believe P&G might consider a roster agency housed inside WPP, which works for major packaged goods competitor Unilever.

That ultimately could help bolster the third largest agency holding company in the mix, Publicis, which has been expanding its relationship with Procter & Gamble.

Agency Holding Company Market Capitalizations


Omnicom: $12.900 billion
WPP*: $11.000 billion
Publicis: $5.250 billion
Interpublic: $4.720 billion
Aegis: $1.911 billion
Havas: $1.400 billion
Grey*: $1.310 billion
Aquantive: $563 million
Digitas: $485 million
MDC Partners: $273 million

Source: Yahoo! Finance, hemscott.net. *Friday's close, prior to WPP/Grey merger agreement.
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