Mr. Sorrell spent the next few years buying more than a dozen small communications companies in Britain and the U.S. Early subsidiaries of the group included the marketing companies Sidjakov, Berman, Gomez & Partners, San Francisco, and Walker Group/CNI, New York and Los Angeles.
Taking over JWT Group
In 1987, Mr. Sorrell stunned Madison Avenue by taking over the JWT Group, parent company of New York-based J. Walter Thompson Co., in the first hostile takeover in the advertising industry, a feat that had been considered impossible.
JWT rejected WPP's initial bid of $434.6 million and even initiated a lawsuit to stop the takeover. But Mr. Sorrell increased his offer to $566 million, and the agency reluctantly agreed to be acquired. Along with JWT, WPP got Hill & Knowlton, one of the world's largest public relations firms.
During the negotiations, three of JWT's most significant clients—Ford Motor Co., Goodyear Tire & Rubber Co. and Eastman Kodak Co.—threatened to put their accounts into review if the takeover happened. Goodyear made good on its threat immediately after the takeover, and Ford pulled an estimated $90 million in billings from the agency. Other major client losses included Burger King Corp. and Sears, Roebuck & Co.'s Discover Card.
Just two years later, Mr. Sorrell again astonished the advertising world with another hostile takeover, this time of the Ogilvy Group, parent of New York-based Ogilvy & Mather Worldwide. The purchase price was approximately $864 million.
As with JWT, some top executives at Ogilvy were adamantly opposed to the agency's being bought by Mr. Sorrell, whose penchant for hostile takeovers earned him the name "the ogre of Madison Avenue." David Ogilvy emerged from retirement to speak against the acquisition, and Ogilvy Chairman Kenneth Roman resigned.
In gaining Ogilvy, WPP also gained powerhouse clients IBM Corp. and American Express Co. It strengthened its relationships with Ford and Unilever, since those marketers had accounts at both Ogilvy and JWT. However, the cost of the deal threatened to derail WPP because it had to borrow heavily to buy Ogilvy. When recession hit the advertising industry, the takeover looked unwise.
In 1990, a WPP profits warning caused shares to plummet 66% in just four days. In fact, the market value of the company decreased from $498 million to $32 million during the recession and, in 1992, the company barely escaped receivership by restructuring its $1 billion debt.
As a result of the downturn, in 1993 WPP divested itself of the Ogilvy-owned agency Scali, McCabe, Sloves, selling it to the Interpublic Group of Cos.' Lowe Group. WPP also agreed to allow Fallon McElligott, Minneapolis, to purchase its independence for $14.6 million.
Buying Young & Rubicam
The booming economy in the latter half of the '90s helped WPP climb back from the brink of financial disaster. WPP regained so much of its power that in 2000 it was able to complete the largest takeover in the history of advertising by purchasing Young & Rubicam, parent of New York-based Y&R Advertising, for $4.7 billion in stock.
The transaction also bolstered WPP's public relations operation, as Y&R's Burson-Marsteller and Cohn & Wolfe as well as Impiric (formerly Wunderman Cato Johnson) came under the holding company's aegis.
With the acquisition of Y&R, WPP briefly became the world's leading advertising communications company (until Interpublic bought True North in June 2001).
For Y&R, the merger was a significant distraction during a particularly rocky year. The agency lost nearly $800 million in billings in 2000, including such blue-chip clients as KFC Corp., Ericsson, Citicorp's U.S. Citibank, H&R Block, the U.S. Army and Kraft Foods' Jell-O account.
For 2001, WPP had worldwide gross income of $8.17 billion, up 2.4% over 2000, on billings of $75.71 billion, up 5%. Its chief agency groups, in addition to Ogilvy, JWT and Y&R, included Red Cell, the former Conquest Network, which consists of Batey Group (now Red Cell Asia), Cole & Weber (now Cole & Weber/Red Cell) and Perspectives (Perspectives/Red Cell), a U.K.-based marketing communications company.
In 2003, WPP acquired a minority stake in HHCL & Partners, London, and announced that it intended to make HHCL the "heart" of its fourth advertising network in Europe.
In May 2003, WPP's Young & Rubicam named Ann Fudge chairman-CEO of the holding company and its Y&R Advertising unit. The appointment made her one of the few African-American female CEOs in the U.S. Later that year, in August, WPP acquired Cordiant Communications Group, owner of Bates Worldwide and various marketing services companies. Bates Worldwide was closed and its accounts divvied up among various WPP agencies, such as Red Cell, or in some regions, such as Asia, left as its own entity, Bates Asia.
For 2003, WPP was the second largest marketing organization in the world, trailing Omnicom Group, with worldwide revenue of $6.8 billion, up 16.9% from 2002, according to Advertising Age.