Providence joins list of Grey Global suitors

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The Independent Online

The pack of predators circling the American advertising group Grey Global is swelling, with the US private equity outfit Providence Equity Partners the latest potential bidder to emerge.

The pack of predators circling the American advertising group Grey Global is swelling, with the US private equity outfit Providence Equity Partners the latest potential bidder to emerge.

Ed Meyer, 77, Grey's founder and controlling shareholder, has appointed Goldman Sachs to sell his company, the last big global advertising group still independent.

He is expected to scoop £19m from a sale that is likely to fetch about $1.5bn (£815m).

Sir Martin Sorrell is among those picking over Grey's books, and WPP shareholders will be looking for an update on any potential bid at interim results on Friday. So far, WPP has remained tight-lipped over its interest in the New York company, but is said to be encouraged that Grey's major client, Procter & Gamble, would not object to WPP's links with rival consumer giant Unilever.

Another potential bidder, the French agency Havas, has joined forces with the US venture capital firm Quadrangle. The US buyout specialist Kohlberg Kravis Roberts - dubbed "barbarians" after its aggressive takeover tactics on Wall Street in the 1980s - is also touted as a possible buyer. Other private equity groups in the frame are Blackstone and Hellman & Friedman.

Grey may now have a competitive auction, after WPP had at one point appeared to be the only runner. Offers are expected to be tabled in the first week of next month, with a quick result likely - probably soon after the US Labor Day holiday on 6 September.

Providence, which is based in Rhode Island, has made a broad range of investments, from the German cable communications provider Kabel Deutschland to the record giant Warner Music. Providence is also part of a group of investors led by Sony looking to buy the Hollywood studio Metro-Goldwyn-Mayer for about £2.7bn.

Last week, Grey reported a 127 per cent surge in profits in the second quarter of its year. They hit $10.8m, compared with just $4.7m a year earlier. Revenues of $364m were 13.8 per cent better than last time.

Grey's results were boosted by a weak dollar, which magnified its success abroad. Revenue was up just 6.8 per cent last quarter after adjusting for currency fluctuations. Profits in Europe more than doubled, in spite of a $4.6m loss in Scandinavia.

On Friday, WPP is expected report record figures too. Yesterday, its shares improved 5.5p to 494.5p.

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