True North said Friday it will acquire Bayer Bess, a $150 million agency whose prize client is Quaker Oats Co.'s Gatorade.
Bayer Bess "has a premier client list, a superb creative reputation and a highly respected management team," said Bruce Mason, True North chairman-CEO.
Last summer, Ron Bess, president-chief operating officer of Bayer Bess, had said the agency wasn't for sale. But both Mr. Bess and Chairman-CEO Gary Bayer-who will stay on to run the agency as an independent unit of True North-said client needs now dictate the shop align itself with an international network. Mr. Bess will become president of Foote, Cone & Belding, Chicago.
While Gatorade, a $65 million account, was pleased with its current arrangement-featuring Bayer Bess as its U.S. agency with Leo Burnett Co., TBWA Chiat/Day and Grey Advertising splitting up international duties-other clients such as Campbell Soup Co., Motorola and Helene Curtis Industries have expressed an interest in Bayer Bess growing internationally, Mr. Bayer said.
Motorola, in fact, is conducting a review of its global media account, a review Bayer Bess can participate in through True North's TN Media unit.
OMNICOM'S '94 OFFER
Neither True North nor Bayer Bess disclosed terms of the transaction, but a source familiar with Bayer Bess said Omnicom in 1994 offered $12.5 million to buy the agency and merge it with TBWA.
Others said Messrs. Bayer and Bess and the handful of additional owners wouldn't take less than that amount. The agency had revenue of about $19 million in 1995.
Sources familiar with Omnicom's deal to acquire Pittsburgh-based Ketchum said the ad agency unit was the deciding factor between bids by Omnicom and Interpublic Group of Cos. (AA, Jan. 8).
Interpublic didn't want Ket-chum Advertising in large part because the shop's marquee client, Honda Motor Co.'s Acura division, posed a conflict with General Motors Corp., a client of Interpublic's McCann-Erickson Worldwide. Interpublic's main interest was Ketchum PR, which would have given the holding company its first major foothold in that discipline.
PR was Omnicom's main interest as well, but it was willing to take all of Ketchum Communications, including directory advertising.
"We're very happy to include it [all]," said John Wren, chairman-CEO of Omnicom's Diversified Agency Services division, into which all three Ketchum units will be folded.
Jerry Della Femina, whose New York agency, Jerry & Ketchum, is 49% owned by Ketchum, will work with Omnicom to find a way to give him and his partners 100% control, said Messrs. Della Femina and Wren.
Those familiar with the deal said Ketchum shareholders will receive close to $60 million in Omnicom stock; Omnicom also agreed to assume debts of less than $10 million. Ketchum had revenue of about $125 million in 1995 on billings of about $1 billion.
Some 400 Ketchum employees own company stock, but the 11 board members own more than 50%. Paul Alvarez, chairman-CEO of Ketchum, said the board approved the deal unanimously.
Ketchum was the largest remaining independent ad agency in the U.S. without an international network. The sale turns that distinction over to Hal Riney & Partners, San Francisco.
NO DOWNSIDE SEEN
"There's not one iota of downside to this," said one top Ketchum creative. "If we have to be associated with somebody, they're [Omnicom] the best."
Omnicom's Porter Novelli PR shop will be run independently from Ketchum.
Mr. Alvarez will move to New York and become a vice chairman of DAS overseeing Ketchum.
Ketchum will fill a spot in Omnicom's ad agency lineup left by Altschiller & Co., New York, which Omnicom agreed last week to sell to Hill, Holliday, Connors, Cosmopulos, Boston. Hill Holliday will merge Altschiller with its New York office, giving it $100 million in New York billings.
Alice Z. Cuneo and Michael Wilke contributed to this story.