Six new advertising millionaires were created yesterday when Creston, the marketing group, bought DLKW Group, the agency behind the Halifax television ads starring its staff, Johnny Vaughn's Capital Radio breakfast show and Burger King, for up to £38.3m.
The deal will land Greg Delaney and Mark Lund, the chairman and chief executive of DLKW, £2m in cash each plus up to £900,000 each in Creston shares.
Of the 33 shareholders in DLKW, another four will get £1m each in cash plus up to £430,000 each in shares. These are Tom Knox, the deputy chief executive, Richard Warren, the planning director, and the creative directors Gary Betts and Malcolm Green. Creston is also buying the 26 per cent of DLKW owned by Interpublic Group, the US marketing services group.
Mr Delaney said: "We see a very bright future for ourselves within the Creston group which is why we are happy to be major Creston shareholders."
The deal will mean Creston, which has public relations, market research and direct marketing businesses, will add an advertising agency with an established client base and proven expertise to its operations.
Don Elgie, Creston's chief executive and a former Saatchi & Saatchi director, said his company's clients - such as BMW and Lloyds TSB - would benefit from the addition of an advertising agency into the group.
The deal involves a down payment of £15m in cash and £4m shares to buy the DLKW holding company, Face Communications, plus a deferred payment of £19.3m based on DLKW's profit-related performance over the next three years. The deal will be financed by Creston's existing £5.5m of cash reserves plus a placing and open offer for new shares in Creston worth £9.5m to fund the initial consideration.
Creston was a former cash shell, listed on the stock market, which Mr Elgie acquired to build a new media services group in January 2001. He said: "Fifty per cent of the marketing pound is spent on advertising; all statistical forecasts on the advertising industry shows it is an upward curve, and we are confident of the financial and trading prospects of the group."