• by June 27, 2004

After years of speculation, one of the largest remaining independent ad agency groups, Grey Global Group, may be putting itself on the block. The New York-based conglomerate, which owns buying shop MediaCom and is the seventh-largest agency holding company in the world, has reportedly hired two investment banks, J.P. Morgan Chase & Co. and Goldman Sachs, to take bids for the sale of the company.

Grey is run by 77-year-old Ed Meyer, who not only is chief executive officer (and has been since the late 1960s), but is also the controlling shareholder, with about 18 percent of the company's stock. Grey has been considered a target for takeover for a long time.

The company's stock price has risen 19 percent in the past week--and, amid this speculation, increased 5.3 percent to $895 per share.

The motive for a sale appears apparent: Meyer's age; and the lack of an apparent succession scenario within the organization. In January, Meyer sold about $20 million worth of Grey shares that he owned. Otherwise, there has been no unusual trading among insiders of the tightly held company.

Some major rival holing companies, including Publicis, WPP Group and Japan's Dentsu, are expected to bid. Publicis and Grey are both long-time Procter & Gamble agencies, and the timing of Grey's play comes just as P&G is wrapping up a major review for a new communication planning assignment that includes both Grey's MediaCom unit and Publicis' Starcom MediaVest Group.

Speculation on the Yahoo! Finance investor message boards over the weekend suggested that Publicis was the favorite to acquire Grey, and that a deal may already have been struck and was pending key client notification.

As for Grey's takeout value, one investor speculated it could be much greater than its current $1.23 billion market capitalization. The investor noted that Grey has been trading at a relatively meager 0.86 market cap to sales ratio. Omnicom and WPP currently trade at a ratio of about 1.6, while Publicis trades at a ratio of 1.2 and Interpublic at 1.0.

Also on Friday, there were changes at the top of Interpublic Group of Cos. Interpublic, which owns Universal McCann, Initiative Media, and MAGNA Global, among other agencies, gained a new chairman with the appointment of Michael Roth. Roth, who had been a member of Interpublic's board for two years, will be chairman and chief executive officer of The MONY Group until its sale July 15 to AXA Financial. He'll then take the role of Interpublic chairman. David Bell will remain president and chief executive officer of Interpublic.

Christopher Coughlin, who has been chief operating officer and chief financial officer of Interpublic since this time last year, will resign at the end of the year. Interpublic has promoted senior vice president/finance Robert Thompson to the job of chief financial officer and executive vice president at the end of the second quarter, Interpublic said.