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Friday, 12 May, 2000, 09:38 GMT 10:38 UK
WPP seals $4.7bn advertising takeover
Martin Sorrell
WPP's Martin Sorrell has built the world's largest advertising group
UK-based WPP Group has created the world's largest advertising company, by buying its US rival Young & Rubicam for $4.7bn (3.1bn).

The all-share deal was agreed earlier in the week and has now been formally approved by both companies.


The WPP empire
Ogilvy & Mather Worldwide
J. Walter Thompson Company
Y&R Advertising
Hill and Knowlton
Burson Marsteller
Ogilvy Public Relations Worldwide
Cohn and Wolfe
impiric (formerly Wunderman Cato Johnson)
OgilvyOne
MindShare
Media Edge
CommonHealth
Sudler & Hennessey
Millward Brown
Research International
Kantar Media Research
Enterprise IG
Landor Associates
Revenues: $5.2bn (1999 pro forma)
WPP shareholders will own two-thirds of the combined group.

The agreement will marry the two companies' advertising, public relations and direct marketing interests.

WPP chief executive Martin Sorrell said: "This transaction creates a worldwide leader. The two organisations are highly compatible. We share a common philosophy and culture."

The new group hopes to make cost savings of WPP at least $30m during the first year.

White knight fails to ride

Young & Rubicam was one of the last few remaining independent agencies.

The WPP take-over deal nearly fell apart earlier this month when both firms argued over 'golden parachute' pay-offs for Young & Rubicam executives and the degree of autonomy the US firm would enjoy.

French competitor Publicis appeared ready to act as a "white knight" and save Young & Rubicam from WPP, but pulled out on Monday. The firm said it would not submit a bid after all.

WPP said that a group of Young & Rubicam's senior executives had agreed to stay with the group, signing new employment contracts and agreeing not to sell two-thirds of their shares for one year.

Shareholder approval

Young & Rubicam still needs to gain approval for the deal from major shareholders and clients which include some of the world's biggest accounts.

WPP is offering 0.835 of its American Depository Receipts - WPP shares traded on US stock markets - for one Young & Rubicam share.

Publicis declines bid

That led to talks between France's Publicis and Young & Rubicam, but Publicis said on Monday it for the US firm.

Young & Rubicam has reportedly dropped its demand for full autonomy by having its chief financial officer Michael Dolan running Young & Rubicam in the first year of the takeover before WPP took over the reins.

Another key sticking point in the negotiations was Young & Rubicam's "golden parachutes"

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17 Aug 99 | The Company File
Record 35m bonus for advert boss
17 Aug 98 | The Company File
WPP beats forecasts
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