Sir Martin Sorrell, the chief executive of WPP, the advertising and marketing services group, was poised last night to retake the number one slot in the global rankings with the $5bn (£3.1bn) acquisition of Young & Rubicam of the US.
Sir Martin is expected to arrive in New York tomorrow to seal the takeover. Advertising industry sources said last night that WPP and Y&R had settled the differences which had led to an earlier breakdown in the talks. Under the deal, WPP is offering 0.835 American Depository Receipts for each Y&R share, a figure which values the US company at around $58 per share. One industry source said: "That figure is a figure I've heard here, but nothing is there until it's there." Yesterday WPP stock closed down 6.7 per cent at 910p.
Sir Martin and other WPP executives are in the process of explaining the linkup to clients and employees and a midweek announcement is judged likely.
The takeover would allow the direct marketing arm of Y&R, which is considered to be among the world's best, to be joined with WPP's respected market research operations. In addition, combining Y&R with WPP's existing agency networks, Ogilvy & Mather and J Walter Thompson, would result in virtually no client overlap. After pursuing the deal for several months, the breakdown in talks 10 days ago threatened Sir Martin's bid to leapfrog WPP's US rivals Omnicom and Interpublic Group.
However, after the French group Publicis pulled out of talks with Y&R last week, executives at the US group modified their terms for a deal with WPP. They agreed to stay for one year and accept an integration committee, which will include two representatives from each company.Reuse content