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Last Updated: Monday, 13 September, 2004, 07:18 GMT 08:18 UK
WPP wins race to buy Grey Global
Sir Martin Sorrell, chief executive, WPP
Sir Martin Sorrell has overseen rapid expansion
UK-based advertising giant WPP is to buy US rival Grey Global in a deal worth $1.3bn (726m).

WPP won the auction for Grey Global, the seventh-largest advertiser in the world, against France's Havas and a US private equity firm.

Under the deal, WPP will pay half the purchase price in cash, and the other half in shares.

The acquisition looks set to create new advertising giant big enough to rival current sector leader Omnicom.

Grey Global's clients include blue-chip firms such as Procter & Gamble, the world's largest advertiser.

Earnings boost

"The addition of Grey Global Group to WPP will bring a number of benefits to our clients, our people and our shareowners," said WPP chief executive Sir Martin Sorrell.

"All of us at WPP are excited by the prospect."

WPP said the deal would contribute to its earnings from 2005, and would provide scope for $20m in cost savings.

The end of the auction for Grey Global comes after years of consolidation in the advertising business, as WPP and rivals such as France's Publicis have snapped up smaller competitors.

WPP has expanded rapidly in recent years by buying up firms such as Ogilvy & Mather and Cordiant Communications.

Grey Global was one of the few remaining large independents, and was seen in some quarters as Havas' last chance to fight its way to the top table.

WPP shares were down 8p at 506p in early trade in London.

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