CANADA'S MDC BUYS U.S. PROMO SPECIALIST

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Canadian marketing company MDC Communications Corp. scooped up another U.S. agency last week.

Toronto-based MDC bought a majority stake in Source Marketing, Westport, Conn., just two months after it made a similar deal with ad agency Margeotes/Fertitta & Partners, New York.

Source Marketing handles sales promotion for clients such as American Express Co., Campbell Soup Co. and Eastman Kodak Co.

Terms of the deal were not disclosed. Source, with some $7 million in billings, will remain autonomous and keep its current management, including President Howard Steinberg. Management will retain a minority stake in the agency.

GAINING `A BIG BROTHER'

Source decided to sell because the company needed critical mass and a full menu of resources to compete, said Mr. Steinberg.

"The quickest way to get there was to have a big brother," he said.

Mr. Steinberg said selling to a large multinational holding company was not an attractive option.

"We didn't want someone to gobble us up," he said, noting that selling to MDC allowed management to keep a stake and protect Source's culture while gaining the resources to grow.

Margeotes/Fertitta executives cited similar reasons for selling to MDC last summer.

Michel Frappier, president of MDC's communications and marketing division, said he was attracted to Source's entrepreneurial spirit and its relationships with clients.

"This will round out our integrated marketing capabilities," he said.

MDC, which also owns a large printing business, plans to spin off its marketing and communications division next year, pending market conditions, Mr. Frappier said.

MORE ACQUISITIONS TO COME

He added that MDC has letters of intent to buy stakes in another ad agency, a public relations agency in Boston and a corporate design company in Washington. A purchase of one of those three is expected by the end of the year.

Source is the third U.S. acquisition for MDC, a publicly traded company with interests in publishing and marketing. MDC acquired its majority stake in Margeotes in August; in May it purchased a 75% interest in CyberSight, an Internet marketing company.

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