Ford is Y&R's anchor client, and a loss of the account would deliver a crushing blow to the agency. Ford is also a client of WPP agencies J. Walter Thompson Co. and Ogilvy & Mather Worldwide. But Publicis works for rival automakers, handling advertising for Renault and General Motors Corp.
A Ford spokeswoman first told Advertising Age Y&R would lose all Ford business globally if it does a deal with Publicis. She later softened that stance somewhat.
"We do in fact have an expectation that any of our advertising agencies are exclusive to Ford Motor Co.," she said. "That's the way we've conducted business for many years. So if something changed, we'd definitely have to review it at the very senior levels of management."
SEEKING A WHITE KNIGHT
Like a damsel in distress, Y&R--pursued doggedly by WPP Chief Executive Sir Martin Sorrell--reached out across the Atlantic last week for a Gallic white knight, Publicis CEO Maurice Levy, to vanquish its aggressive British suitor.
Y&R executives "were not willing to agree [to WPP's offer] so Martin put pressure on them," said an ad executive familiar with the negotiations. "When the pressure became a bit strong, Y&R decided to look for somebody else and approached [Publicis]."
At press time, Publicis was said to be poring over financial documents with the possibility of putting an offer on the table early this week.
WPP'S OFFER: $70 PER SHARE
Although Publicis has made several recent acquisitions, including buys of Fallon McElligott, Minneapolis, and Hal Riney & Partners, San Francisco, the company is believed to be confident it can afford to make at least an initial bid for Y&R, financed by a stock offering. It is unclear how much staying power Publicis would have if WPP escalates a bidding war.
It is estimated WPP's all-stock offer would value Y&R at about $70 a share, or just over $6 billion. Y&R stock rose 16% to finish last week at $55.69.
Y&R CEO Tom Bell began exploring alternatives as a way to fend off WPP. Mr. Bell is said to harbor a personal animus toward Sir Martin. The two companies first began talks about four months ago, and WPP's first deal was said to value Y&R at $65 a share. Negotiations were stalled over various issues, including Y&R's establishment of "golden parachutes" for top executives that would have cost WPP about $60 million.
Y&R also was said to be concerned about autonomy and whether WPP would dismantle its integrated marketing structure. On WPP's side, Sir Martin is worried over Y&R's management depth and stability.
The benefits of a match with WPP for Y&R include a wider global presence, access to WPP's research firms, consultancies and direct marketing assets and a partnership in media that would incorporate two of the world's largest media agencies, Y&R's Media Edge and WPP's Mindshare. It is expected that the media agencies would not merge.
Contributing: Laurel Wentz