EURO RSCG MIDDLEBERG MERGED INTO MAGNET COMMUNICATIONS

Havas Consolidates Public Relations Firms

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A correction has been made in this story. See below for details.

NEW YORK (AdAge.com) -- In what effectively spells the end of PR tech specialist Euro RSCG Middleberg, Havas announced today it is merging the firm with public relations sibling Magnet Communications, which had been part of another Havas unit, Arnold Worldwide.

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The struggling holding company last year said it would merge or sell marketing services assets that either did not fit under the Euro RSCG Worldwide umbrella or that were unprofitable.

Technology specialist
The decision to combine Magnet Communications, a 100-person shop that counts IBM, Johnson & Johnson and Mercedes Benz as clients, and Euro RSCG Middleberg, a 48-person agency that shot to fame as a technology specialist, will result in a new agency to be called Euro RSCG Magnet.

Middleberg, which employed 150 people when it was acquired in June 2000, became one of the most sought after independent shops during the dot-com boom. Middleberg generated revenues of $11.4 million and was projected to reach $22 million in 2001 when Havas acquired it. One of the main tenants of the original deal was that the name Middleberg would remain on the door.

Founder and CEO
The agency's founder and CEO, Don Middleberg, became a multimillionaire after selling his agency, though a precise sales figure was never revealed. Mr. Middleberg will become chairman of Euro RSCG Magnet, a Magnet spokesman said.

Middleberg's New York staff will move into Magnet's offices. Magnet's David Kratz will take over as CEO of the new agency, while Magnet President Paul Jensen will share responsibilities with Middleberg's president, Aaron Kwittken. Magnet will now be under the watch of Euro RSCG Worldwide's president and chief operating officer, James Heekin.

Mr. Kratz said clients are beginning to be informed of the change, adding that there were some potential conflict issues that were currently being worked out.

He also said Mr. Middleberg would remain part of the company because of his close client contacts and would continue to conduct his annual survey of media habits with Columbia University.

Remaining offices
Rob Coburn, chief marketing officer of Magnet Communications, said Havas was currently reviewing the situation of its remaining offices. Both agencies have staff in Chicago, though Middleberg's team had been merged into Euro RSCG Tatham Partners' office last year. Magnet's staff in Chicago will also move into the Tatham office. Mr. Coburn could not reveal current billings for either agency.

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CORRECTION: An earlier version of this story incorrectly reported that Don Middleberg was discussing a potential new role within Euro RSCG. Mr. Middleberg becomes chairman of the new agency, Euro RSCG Magnet.

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