Urge to merge fails to surge

When GGT finally fumbled its way to a 105m takeover of the French agency network BDDP a little over a year ago Lorna Tilbian, a leading City analyst, commented drily: ‘It’s not without risks’ (MW September 27 1996). Mild understatement, as events have turned out.

The ‘merger’ was admirably conceived, in strategic terms. The middle is a very uncomfortable place to be these days and the deal promised to catapult two medium-sized companies from international players into a global force. GGT trebled in size and BDDP found an elegant way of escaping its increasing indebtedness.

Sadly, reality has not matched expectations so far. While teething troubles were to be expected from such complicated deal-making, the result has scarcely been a case of ‘reculer pour mieux sauter’. To outward appearances, GGT chief executive Mike Greenlees is engaged in a non-stop shuttle service patching up the far-flung BDDP empire and placating disaffected clients. A state of affairs which cannot be healthy for the rest of his business.

It is interesting to speculate how this instability came about. A major part of the problem originates in the structure of the two networks. While there was no serious conflict involved, neither did the merger create a strong backbone of international clients. BDDP brought a list of blue-chip clients, but none had the advantage of being truly worldwide – at time when there is a strong trend towards global centralisation of accounts. Tag Heuer, for which BDDP had produced showcase advertising, was probably the nearest thing to a global client. Unfortunately, the business has just been lost in its entirety to BBH.

Arguably, the strong regional flavour of the network’s roster is also leading to managerial difficulties. This has become particularly apparent in the US, where Greenlees has had to grapple with the running sore that is Wells BBDP – the substantial part of BDDP.GGT’s North American operations. The keystone $125m P&G account guaranteed the US management team – headed by Frank Assumma – a high degree of independence from London. But just recently things have gone badly awry, forcing Greenlees to intervene personally. Wells has lost two major accounts, Liberty Mutual and much of Bristol Myers, in as many months. It has also shed much of its senior management, including its executive creative director, its president and its head of planning. Which sounds like carelessness; certainly it has P&G worried.

But, as if this were not enough, BDDP.GGT is being challenged in other corners of its empire. Its principal representation in the Far East is through a minority stake in the well-regarded Batey group. Nimble footwork will be required here as rival marketing services group WPP has recently bought a 37 per cent stake in Batey – and expects to take full possession by the turn of the century.

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