Executives from Japan's Dentsu, the world's largest ad agency brand, are believed to have traveled recently to the U.S. for meetings with top executives of Leo Burnett Co., the world's eighth largest.
Although the nature of the talks could not be determined--and no deal is believed to be imminent--there is speculation Dentsu would be interested in some kind of financial link with Burnett.
Dentsu spokesmen would not confirm the meeting, and Burnett officials declined comment. But in a recent interview with Crain's Chicago Business, Burnett Chairman-CEO Rick Fizdale said the shop had rebuffed recent overtures from two unidentified major agency companies.
Burnett has been exploring alternatives to a public stock offering to shore up its financial position and raise cash for acquisitions. Last year, the agency sold its Chicago headquarters to a real estate investment trust in an effort to clear some debt off its balance sheet.
OPEN TO A PARTNER?
While Burnett has steadfastly maintained its desire to remain independent, it's not clear if the agency would be open to selling a minority stake to a strategic or financial partner. Such a move would be similar to Young & Rubicam's decision in 1996 to sell a stake to Hellman Friedeman & Partners as part of a recapitalization; Y&R went public this year.
Last year, Burnett took a minority stake in Bartle Bogle Hegarty, London. At the time, Burnett executives indicated the Bartle investment was the first of such ventures.
Burnett has reportedly been exploring alliances with other shops with which it shares clients. Burnett's Starcom media unit and TeleVest--the media unit of D'Arcy Masius Benton &Bowles parent MacManus Group--are negotiating the formation of a global media alliance. The companies have denied interest in broadening that deal to bring together the two agencies.
Dentsu and Burnett share four major clients: Coca-Cola Co., McDonald's Corp., Phillip Morris Cos. and Procter & Gamble Co.
According to executives close to Dentsu, the company has met with a number of agencies in the past, hoping to expand billings outside Japan from 15% to 25% by the end of the decade.
The company recently announced it would go public in 2001 as part of an effort to shed its Japan-centric practices and revamp its global operations.
Contributing: Normandy Madden.
Copyright September 1998, Crain Communications Inc.