Leagas Delaney poised to seal AMV buyout

Leagas Delaney will shortly sign a management buyout deal with its owner Abbott Mead Vickers – a move first predicted in Marketing Week (March 21).

Leagas Delaney has had wide-ranging conversations with agency groups, including Interpublic and WPP, in an effort to bankroll its buyout and secure international network support.

However, it is expected to maintain its independence – at least in the short term – as a result of AMV putting an especially attractive offer on the table, which makes the pursuit of a financial backer less pressing.

Leagas Delaney, which has billings of up to 70m and is highly rated for its creative output, is a wholly owned subsidiary of AMV. The immediate cause of the buyout is an account conflict. Last October Leagas Delaney picked up business from Coca-Cola on the Fanta account. AMV itself is 26 per cent owned by BBDO, which handles the rival Pepsi account worldwide.

In addition, leading Leagas Delaney directors are thought to have become disillusioned with the lack of financial rewards being offered by their parent company.

The deal with AMV is believed to involve a loan note rather than cash on the table and to value Leagas Delaney considerably below its real market price. In the year to December 31 1996, Leagas Delaney is thought to have achieved operating profits of about 400,000 on revenue of about 9m. This year, the outlook for profitability is considerably improved on revenue that will increase slightly. The market value of Leagas Delaney is estimated at up to 9m.

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