ASATSU, DAI-ICHI TO FORM NO. 3 AGENCY IN JAPAN MERGER PLANNED IN TOUGH MARKET

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[tokyo] Japanese ad agencies Asatsu and Dai-Ichi Kikaku Co. said they would merge, effective Jan. 1. The combination will make the new agency the third-largest in Japan, though still well behind No. 1 Dentsu and No. 2 Hakuhodo.

Leaders of the new agency, to operate under the Asatsu name, also said it will seek a working relationship with London-based WPP Group that will include capital and business tie-ups. No formal decision has been made about the size of WPP's participation.

WPP agencies J. Walter Thompson Co. and Ogilvy & Mather Worldwide already operate in Japan. JWT was ranked No. 14 in 1997 based on gross income and O&M No. 26.

TAKEDA AT THE HELM

Asatsu President Tsutomu Takeda will be the head of the combined Japanese agency.

The merger is expected to intensify competition in the Japanese advertising industry, which is bracing itself for a downturn because of Japan's moribund economy.

Asatsu ranked No. 4 in Japan in 1997 with gross income of $198.2 million on volume of $1.67 billion, according to Advertising Age's Agency Report (AA, April 21). Dai-Ichi Kikaku ranked No. 6, with gross income of $142.6 million on volume of $949.2 million.

Their combined 1997 gross income of $340.8 million would have made them the No. 3 agency in Japan, displacing Daiko Advertising, Tokyo, which reported gross income of $204.4 million on volume of $1.65 billion.

Dentsu reported gross income of $1.55 billion last year, and Hakuhodo reported gross income of $777 million.

U.S. HOLDING COMPANY POSSIBLE

One advertising executive said ownership in the new agency is expected to be dominated by Asatsu with a 50% ownership and with Dai-Ichi Kikaku at 25% to 30%, and WPP the remainder. The executive said a holding company may be established in the U.S. to oversee the U.S. operations of the two Japanese agencies.

Asatsu America, Gardena, Calif., claims billings in the $20 million range, and specializes in ethnic marketing to Asian Americans. Clients include Asahi beer. Dai-Ichi Kikaku is an investor in Kovel Kresser & Partners, Venice, Calif., a $60 million agency whose clients include Playboy Enterprises and Flagstar Corp.'s Carrows restaurant chain.

Kovel has been interested in expanding through acquisitions and some executives said the move might enable it to do so. Contributing: Alice Z. Cuneo

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