Tokyo-based Dentsu announced today it's in negotiations to "establish a business relationship" with Chicago-based Burnett. The scale and structure of the relationship is still being discussed, but the companies confirmed that Dentsu--Japan's biggest ad organization--may buy a minority stake in privately held Burnett.
Such action, however, would not be a prelude to a Dentsu acquisition of Burnett.
"Importantly, Leo Burnett and Dentsu are not interested in merging. We are as committed as ever to maintaining separate and distinct agencies," said Burnett Chairman-CEO Richard B. Fizdale. "Burnett is also committed to staying independent and private, with our attention squarely focused on clients."
Mr. Fizdale said proceeds of any sale of a minority stake to Dentsu would be used to help fund Burnett's acquisition and diversification drive.
Talks about a link between the two agency giants were first reported in September. An alliance between Dentsu, the world's fourth-largest ad network, and Burnett, the ninth-largest, would provide Dentsu with a third channel to service its clients internationally, where marketers are more sensitive about account conflicts than in Japan. Burnett would get greater access to Japan's largely closed ad market.
Dentsu had 1997 worldwide gross income of $1.99 billion and billings of $14 billion; Burnett had gross income of $878 million and billings of $6 billion.
Currently, Dentsu has a small network of Asian, European and U.S. agencies, and it holds a half ownership in Dentsu, Young & Rubicam Partnerships, focused on the Asia-Pacific. Dentsu said in a statement it will "continue to maintain a strong and rewarding relationship" with Y&R through its alliance, which includes "the highly successful DY&R network."
Copyright December 1998, Crain Communications Inc.