Saatchis prepare to make their stock market comeback

Advertising gurus who packaged Mrs Thatcher to seek AIM listing for new agency
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The Independent Online

Charles and Maurice Saatchi, the advertising gurus who put the "ism" into Thatcherism, have long been renowned for believing in the impossible. Which may explain yesterday's shock news that they intend to seek a stock market listing for their advertising group M&C Saatchi, spawned less than a decade ago after one of the most colourful City bust-ups of all time.

Charles and Maurice Saatchi, the advertising gurus who put the "ism" into Thatcherism, have long been renowned for believing in the impossible. Which may explain yesterday's shock news that they intend to seek a stock market listing for their advertising group M&C Saatchi, spawned less than a decade ago after one of the most colourful City bust-ups of all time.

A flotation, scheduled for this summer, would bring the brothers full circle since they were unceremoniously ousted from Saatchi & Saatchi, the company they founded in 1970 and which went on to create some of the most iconic advertising campaigns of the 1980s.

Then, they were hounded out by the City in an early example of shareholder rebellion; now, they want institutional investors to bankroll their expansion into continental Europe.

M&C Saatchi, the agency behind slogans such as "The world's favourite airline" and "Australians wouldn't give a XXXX for anything else", is planning to raise £10m from selling a minority stake in a stock market listing that would value the group at about £75m. The five founding partners, all former Saatchi & Saatchi men, would retain a "significant majority stake", David Kershaw, the chief executive said. The five - Charles and Maurice, Mr Kershaw, Jeremy Sinclair and Bill Muirhead - share 75 per cent of the company, while senior managers hold the remainder.

Although neither Charles nor Maurice has much to do with the day-to-day running of the business - Charles is too busy championing young British artists, while Maurice co-chairs the Conservative party - both remain synonymous with the company that marks their rise, Phoenix-like, from the ashes of a career that many would have long since abandoned. The pair seemed destined for disaster when their Saatchi & Saatchi empire met a sticky end in the mid-1990s, brought down by a fatal combination of hubristic greed and the after effects of Black Monday.

Fittingly for the duo who are credited with helping the Tories win four elections - most memorably in 1979 with their "Labour isn't working" image of dole queues - and coining what became known as Thatcherism, their Thatcherite appetite for growth was their downfall.

Not content with owning 37 companies by 1986 and topping the global advertising league, they set their sights on creating a global integrated business services empire. In 1987, months before the stock market crash, they attempted to bid for Midland Bank. Their Nero-like improvidence, which meant they thought little of spending £70m on a one-off payment to have Saatchi & Saatchi emblazoned in enormous letters on the side of their Berkeley Square base, where they occupied a single floor, meant they wanted to rule the world. Their move for the bank, now part of HSBC, was laughed out of town.

The collapse of the Saatchi & Saatchi share price meant the mountain of debt the brothers had amassed during their global acquisition spree grew too much for shareholders to stomach. It was certainly too much for one, Chicago-based David Herro, who (some claim) along with Robert Louis-Dreyfus, the then head of Adidas and a former chief executive of Saatchi & Saatchi, spearheaded the revolt that presaged the brothers' departure. Maurice left first, in January 1995, after the Saatchi & Saatchi board objected to his generous remuneration package. Charles swiftly followed, as did the trio who immediately helped to co-found M&C Saatchi.

"Everything had gone so well for so long that we thought we could walk on water. Then the gods looked down and decided, 'Those guys need cutting down to size'," Maurice later commented.

After a series of abortive legal challenges from both sides, the Saatchis were allowed to keep their name (Charles: "A bloody good name, so bizarre nobody will forget it.") and M&C Saatchi was born. Meanwhile, Saatchi & Saatchi was broken up, before being bought in 2000 by France's Publicis. The ill-fated Cordiant Communications, which must have rued the day it chose to keep Michael Bungey over Maurice Saatchi, was put out of its misery last year by WPP, the advertising giant run by the Saatchi's former bean-counter, Sir Martin Sorrell.

Yesterday Mr Kershaw insisted that M&C Saatchi was as different today from the Saatchi & Saatchi of old as night is from day. Where the old group lived by acquisitions, the new group eschews them for organic growth; and where the old group had a devil-may-care approach to debt, the new group doesn't know the meaning of red ink.

"Our attitude to advertising and clients has been constant but our operating and financial model couldn't be more contrasting," Mr Kershaw said. He said there was no hint of nervousness among the five partners about their return to public life. Maurice, he added, "is more aware than most of the difference this time round because he was instrumental in designing a modus operandi that is totally contrasting with the old one".

Lorna Tilbian, a media analyst at Numis Securities, said: "They came full circle from the bitter lessons of the 1980s and 1990s and created the perfect business model. They are the brothers who invented global advertising and one-stop shopping, reinvented it as a boutique and ended up being the largest independent with a global offering."

Nevertheless, news of the impending listing was met with incredulity by some in the industry yesterday. "It's surprising that Maurice and Charles would want to go public, given what happened to them before," one senior advertising executive said. Industry sources said the reason the brothers had opted for the float was because they had spent the past two years trying - and failing - to find a willing buyer. "They couldn't get the price they thought it was worth," one said.

Charles, who recently married the self-styled domestic goddess Nigella Lawson, is said to be in need of some cash: two divorces and an art collection that spans Damien Hirst, the Chapman brothers and Tracey Emin don't come cheap.

Lord Bell, the public relations wizard who spent 15 years working with the Saatchis and now runs Chime Communications, said the brothers' move was typical of a duo who "aspire to things that other people think aren't possible".

He added: "[The flotation] is going to make some waves in the sector. Suddenly there will be a listed business that is really exciting that isn't one of the big three or the two big French ones. If anybody can get hold of the shares, they should do."

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