WPP acquires Grey for $1.5 billion
pharmafile | September 16, 2004 | News story | |
Global communication services giant WPP has bought its rival the Grey Global Group for $1.5 billion, furthering the consolidation of companies serving the pharmaceutical and other industries.
The acquisition puts the combined company on a par with Omnicom, previously the largest group in the world, and brings Boehringer Ingelheim to WPP's client base, while strengthening the group's existing ties with the world's two largest pharmaceutical clients GSK and Pfizer.
WPP outbid its smaller rival, the French advertising group Havas, to acquire Grey, the last remaining independent network of agencies.
Grey, whose UK healthcare communications agencies include Grey Healthcare, Darwin Grey Communications and GCI, accepted a $1.5 billion joint cash and stock bid from WPP, having earlier rejected an offer from Havas.
Sir Martin Sorrell, group chief executive of WPP said the deal would "bring access to new clients, strengthen our activities in advertising, media investment management, public relations, healthcare and direct and interactive."
He added that Grey's broad geographic spread would further strengthen WPP's market position.
Grey's rejection of Havas leaves the French group precariously balanced in a middle ground between the top tier of communications groups, comprising WPP, Omnicom, Interpublic and Publicis and the smaller agencies. Analysts say this position could see Havas itself become a takeover target.
Grey will continue to operate under its current name as an independent network within the WPP group which includes UK healthcare communications interests, such as Shire Health Group, Matthew Poppy Ogilvy and Burson-Marsteller.
WPP has persuaded veteran Grey chairman and chief executive Edward Meyer to continue in his present roles until at least the end of 2006.
Meyer said: "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.
"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."
The deal, which still requires the approval of Grey's shareholders, will see the Grey Group become a wholly owned subsidiary of WPP, probably by the end of the year.
