Interpublic Group of Cos. has informed key clients it is actively exploring a merger of two of its agencies--Ammirati Puris Lintas and Lowe Group--although the marketers are being told plans aren't finalized.
Interpublic also is in talks to acquire MacManus Group, the parent of D'Arcy Masius Benton & Bowles.
The two moves, each of which would send aftershocks through the advertising industry, are expected to be discussed at the holding company's Oct. 26 board meeting in New York.
WELCOMED BY CLIENTS
Several executives at marketers that are clients of Ammirati or Lowe said they have been told a deal is in the works to join the two. One executive said clients would welcome the merger.
"It brings a strong creative resource [Lowe] into a quite strong network [Ammirati]," the executive said.
But Ammirati North American Chairman-CEO Jim Allman said his U.S. clients "have not been informed of such a merger." He declined further comment, as did Lowe.
"There is no announcement coming out of the board meeting," said Interpublic Chairman and President-CEO Philip H. Geier. "We're going to release earnings."
When asked if the Ammirati/Lowe merger and MacManus acquisition will be on the agenda, he answered: "I don't know if they'll be discussed. We're a public company, we discuss a lot."
While some clients are being consulted, few agency executives are said to be included in the talks. High-level executives at both Ammirati and Lowe claim to know little about the negotiations. Several said only Mr. Geier and Chief Financial Officer Eugene Beard know all the details.
Talk of a merger between the sibling Interpublic agencies has buzzed about the industry for years.
Lowe is known for its strong leadership and creative prowess, but has lost pitches because of its lackluster international network. Ammirati has a stronger international network, but has struggled with leadership issues and management turnover.
A combined Ammirati/Lowe would rank No. 5 in the world with $1.03 billion in annual gross income, above Euro RSCG Worldwide and just below J. Walter Thompson Co., according to Advertising Age data. Ammirati ranked 15th and Lowe 21st last year.
The merged agency would have an estimated $7.6 billion in billings.
But it also would have to contend with several seemingly irreconcilable client conflicts that could result in the loss of some accounts. Ammirati handles Unilever work, while Lowe works with German detergent and haircare marketer Henkel. And Ammirati handles General Motors Corp. business, while Lowe works for Toyota Motor Europe.
Who would lead the merged agency is not clear. There had been speculation that Lowe Chairman Frank Lowe was resisting the merger, although he's now said to be an integral part of the talks. The role of Ammirati Chairman Martin Puris is less clear; even before the merger rumors resurfaced, there was talk he might leave the agency by yearend or that Interpublic would bring in a high-level manager to work with Mr. Puris.
The MacManus rumor also has swirled for some time, but those talks are said to have heated up considerably. MacManus Chairman Roy Bostock last week again denied rumors the holding company will be acquired by Interpublic.
The most obvious client conflict in that scenario is between Interpublic's Unilever work and MacManus' Procter & Gamble Co. business.
One other possibility is a merger of the media buying operations of Interpublic and MacManus.
Based on 1998 data, an acquisition of MacManus would make Interpublic the world's largest advertising organization, with gross income of nearly $5.2 billion.
Contributing: Laura Petrecca, Bill Britt, Chuck Ross, Alice Z. Cuneo
Copyright October 1999, Crain Communications Inc.