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Geier INTERPUBLIC'S AMMIRATI PURCHASE IS PROVING COSTLY

By Published on .

The acquisition of Ammirati & Puris is costing more than the $60 million Interpublic Group of Cos. bargained for.

In gaining Ammirati and its high-profile Burger King Corp. account, Interpublic now stands to lose Fahlgren, a Parkersburg, W.Va.-based shop that counts on McDonald's Corp. co-op business for more than a quarter of its $150 million in billings.

It's also likely Interpublic's McCann-Erickson Worldwide, New York, will be forced to sacrifice the McDonald's co-op work that represents the bulk of specialty unit McCann Universal Group's $53 million in billings.

McDonald's has a total of $90 million to $100 million in billings at Interpublic.

Leo Burnett USA, Chicago, and DDB Needham Worldwide, New York, are the fast-food chain's lead national agencies.

"McDonald's doesn't want to be part of Interpublic" with Burger King in the fold, said one industry executive.

Interpublic CEO Philip Geier Jr. said the holding company is discussing a "management investor buyback" by Fahlgren, but said he didn't know when a deal would be completed. Fahlgren, acquired four years ago, still would be able to use Interpublic agencies for international assistance, he said.

Fahlgren President-CEO Steve Drongowski said the agency is interested in a buyback, but also must consider the needs of its other clients.

A buyback is said to be the only way Fahlgren can keep McDonald's, whose franchisees unexpectedly balked when the Ammirati acquisition was announced last month. Ammirati is now merged with Interpublic's Lintas Worldwide network.

A solution is less clear-cut for McCann-Erickson, where executives are said to be steamed about a forced forfeiture of McDonald's.

McDonald's is a smaller account for Interpublic than Burger King, with annual spending of $160 million. But Big Mac is regarded in the industry as a more devoted client.

Ammirati won Burger King earlier this year. However, it is one of a string of agencies hired in the past decade.

Interpublic made its first post-Ammirati sacrifice early last week by selling a 49% stake in del Rivero, Messianu, Coral Gables, Fla., to rival Omnicom Group, so del Rivero could cinch McDonald's $9 million Hispanic creative account. Castor Advertising, New York, had been Hispanic agency of record; media buying earlier went to Burnett.

Omnicom is said to have paid $5 million to $10 million for del Rivero, which bills about $13 million. The agency will be a unit of DDB Needham.

Ironically, Lintas briefly forgot its own McDonald's affiliations last year. In an unusual move, the agency impetuously placed an ad in The Miami Herald asking to be considered in the fast-food chain's then-review. Lintas was unable to participate because of its connection to Fahlgren.M

Christy Fisher contributed to this story.

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