South Korean ad company Cheil Worldwide has reached a deal to buy a stake in Iris Worldwide, a London-based international agency network that works with clients including Samsung, Reckitt Benckiser, Shell, Adidas, Barclaycard, Domino's and Diageo.
The companies declined to disclose terms of the deal, even broad parameters such as whether Cheil is buying a majority stake in Iris now or something smaller. But Cheil is making "a significant initial investment" that "will potentially rise to 100% of the business over the next five years," the company said in a statement.
As part of the deal, U.S. publisher Meredith Corp. is relinquishing the minority stake in Iris it acquired in 2011.
Cheil was founded in 1973 by the owner of Samsung, Lee Byung-chul, and initially functioned as a house agency for the group. After relying for many years on Samsung as a major client, the Seoul-based agency has been expanding internationally and trying to diversify its client roster. Samsung currently owns 18% of Cheil, according to the agency. Iris Worldwide also works with Samsung.
In earlier acquisitions, Cheil bought U.S. agency McKinney in 2012 for an estimated $50 million, and last year upped its ownership stake in London-based Beattie McGuinness Bungay to 75%. Both those agencies count Samsung as a client. Samsung conducted a major review of its advertising and media agencies this year, in which Cheil lost a small amount of below-the-line business to Iris.
Cheil also owns 100% of U.S. digital shop The Barbarian Group and formed the Cheil Greater China in 2012 after buying Bravo Asia, which has offices in Shanghai and Hong Kong. But the Iris deal is a bigger step toward Cheil's goal of becoming a significant global player. In announcing the deal, Cheil said in its statement: "The partnership will begin with a shared vision to create a genuine alternative to the traditional holding company model."
Iris had 2013 revenue of $80.8 million, including $17 million from the U.S., and 820 employees, according to the Ad Age DataCenter. The network, with 17 offices in North and South America, Europe and Asia, will continue to operate under the Iris brand.
Cheil ranks as the world's 15th biggest agency company, with 2013 revenue of $693.3 million worldwide, up 16% from the previous year, according to the Ad Age DataCenter. The U.S. accounted for $55.8 million in 2013 revenue, a 17.2% decline from 2012.
Cheil was advised by Results International -- which also brokered this year's deal between China's Blue Focus and the U.K.-based agency network, We Are Social – and law firm Linklaters. Iris was advised by accountants BDO and legal firm Osborne Clark.