Last week, a lot of people found out about the Gloucester, Mass., promotional products design outfit when an anonymous source leaked that Cyrk was seeking to acquire Bozell, Jacobs, Kenyon & Eckhardt, holding company for Bozell Worldwide.
Cyrk's clients include Mars Inc., Gillette Co. and Fidelity Investments. But close to 90% of its business is from Philip Morris USA. Its after-tax earnings are estimated at $30.4 million and its revenues at $401.9 million. The company wouldn't comment about its interest in BJK&E.
Charles Peebler, BJK&E president-CEO, acknowledged last Wednesday the two companies have met twice this year, "once three months ago, which was the first time, and then the last time was within the last 15 days."
But, he said, BJK&E was not interested in pursuing a deal and Cyrk "was not addressed at our board meeting," held last week in Palm Springs, Calif.
Mr. Peebler said Cyrk is looking to "broaden its portfolio. We had no interest but we explored it with a couple of talks, in-depth talks .*.*. That's where it stopped. I liked the people and I'm not so sure that we might not do something else with them.
"We might use them for promotion or whatever in the course of our business. We're not discussing a joint venture but I don't rule anything out in terms of anything like that."
Cyrk, while financially intriguing, is said by industry executives to be marked by erratic earnings performance from quarter to quarter because of the nature of its business and how the income flows in. For example, in January, the company announced first-quarter sales would sharply decline from the year-earlier period because a promotion with Philip Morris had wound down. For 1995, observers expect Cyrk to be essentially flat in earnings and revenue.
Montgomery Securities in San Francisco took Cyrk public in July 1993 and also handled its secondary and third public offerings. Its latest offering in December 1994 indicated its interest in "acquisitions or strategic alliances with businesses that are complimentary to the company's business." The offering made no specific mention of Bozell Worldwide.
For a company that might look to go public, like BJK&E, Cyrk is an interesting proposition because it is cheaper to go public through an existing entity than to do an initial public offering.
Agency sources believe Bozell, whose fiscal 1995 revenues are expected to reach $343 million, is in play. "It's a mid-size agency that doesn't have a global network," said James Dougherty, an analyst at Dean Witter. "Bozell will need to align itself with an international network like Ammirati & Puris and Scali McCabe Sloves did in order to grow."
Another possibility, said sources, is that Bozell would like Dentsu to increase its interest in Bozell. Dentsu already has a relationship with Bozell's Temerlin McClain agency. But Dentsu sources said it is unlikely to increase its investment in Bozell.