An Interpublic executive said that once conflict and management issues are hammered out, Lowe will present its plan to Interpublic Chairman-CEO John J. Dooner Jr., who will make a final decision in the next few weeks.
"It's something we've been talking about on and off for some time," the executive said. "There are a number of issues to be resolved, such as client conflict and who does what, so it isn't a done deal." The executive also characterized the plans as a "closure of Bozell," rather than a merger.
While Bozell has looked particularly wobbly in recent years, Lowe-which has gone through a series of disruptive mergers-has also struggled to find stable ground.
Bozell and Lowe officials referred calls to Interpublic. "If combining operations or encouraging our companies to collaborate in new ways offers such benefits, we will always consider it," Interpublic's spokesman said.
The conflicts center on the agencies' banking and personal-care clients. Lowe handles HSBC bank and Johnson & Johnson, while Bozell counts Bank of America, a $167 million account, and Andrew Jergens Co. as clients.
Cathy Bessant, corporate marketing and communications executive at Bank of America, couldn't be reached for comment. But Interpublic is likely to be able to retain Bank of America, since it won the account in a holding-company shootout with Omnicom Group in October (AA, Oct. 28).
Bozell, with U.S. billings of $877.8 million, employs 300 at its single office in New York, while Lowe operates in 82 countries. Lowe's U.S. billings are $1.2 billion. Troy Mastin, an advertising analyst at William Blair & Co., speculated the move was a cost-cutting maneuver that will allow Interpublic to reduce expenses by merging operations in certain cities and rationalizing office space.
Said an executive at one Bozell client, "I've been told I'll have the same account team, the same creative team and expanded resources, so I'd be happy about it."
Another question is whether a merged Lowe and Bozell will be able to retain Bozell client Verizon Wireless. Last week Verizon Communications cut its ties with Lowe for the corporate business in favor of independent McGarry Bowen, New York. Jim Gerace, a spokesman for Verizon Wireless, said he was not aware of the merger talks, but added, "Our brand campaign won't be affected by anything that goes on there."
A former Bozell executive said it made sense for Interpublic to winnow down its tens of agencies and shore up the smaller ones: "It's smart to do some consolidation because [Interpublic] has way too many brands."
Talks with clients about the ramifications of the deal began in earnest at the end of December, said one insider.
The deal, if completed, ends a long, slow decline for Bozell. It began in 1999 when Interpublic opted to realign Bozell and sibling Foote, Cone & Belding, giving FCB the global clients that had been at Bozell.
Bozell CEO Tom Bernardin, who could play a key management role in a merged operation, could not be reached at press time.
"They had to do this," said one Interpublic executive. "Bozell is ready to fall apart."
Bozell began as Bozell & Jacobs in Omaha, Neb., in 1921, founded by Leo Bozell and Morris Jacobs. In 1967, it acquired Emerson Foote and moved its headquarters to New York. It then merged with Kenyon & Eckhardt to become BJK&E in 1986. It was reorganized as Bozell Worldwide in 1992 and acquired by True North Communications in 1997. Four years later, True North was acquired by Interpublic.
Lowe, meanwhile, has gone through its own series of tumultuous mergers. Perhaps the most disruptive was its 1999 merger with Ammirati Puris Lintas.
contributing: stephanie thompson, mercedes cardona