The $1.3bn (£700m) bid battle for Grey Global is believed to have narrowed to two players, Publicis Groupe and WPP Group, although Japanese marketing services conglomerate Dentsu has shown an interest.
Publicis – through its advertising network subsidiaries Leo Burnett and Saatchi & Saatchi – shares a core client with single network group Grey, in Procter & Gamble. WPP, on the other hand, faces a prima facie conflict in the event of an acquisition because it handles a major part of rival Unilever business through its J Walter Thompson and Ogilvy & Mather networks.
However, observers point out that the situation is more complicated than it appears at first sight. P&G is believed to have reservations about consolidating nearly all of its business in a single marketing services group. In addition, much of Grey’s P&G business is in the cosmetics sector, which may cause tension with L’OrÃ©al, a major Publicis client.
Conversely, Unilever has signalled its assent to an acquisition by WPP, provided that WPP ringfences Grey in an entirely separate network, according to sources close to the situation.
Grey Global is effectively owned by 77-year-old chairman and chief executive Ed Meyer, who holds about one-third of the stock but has majority voting rights.
The expiry of these voting rights in about 18 months’ time, rather than any immediate concerns over his age or health, are what is thought to have persuaded veteran adman Meyer to hoist the surprise “for sale” sign over Grey. Grey insiders believe the outcome of the negotiations will be heavily influenced by Meyer’s own prospective role in Grey Global post-acquisition, rather than merely by the highest bid.