Interpublic on July 17 announc-ed its agreement to buy IPR, parent of Shandwick and Golin/Harris, in a stock swap worth $169.2 million.
London-based IPR billed itself as the world's largest independent public relations company, with net fees in excess of $200 million.
Interpublic and IPR agreed to a deal after at least four months of talks. The acquisition is expected to be completed by October.
The reporting structure for the new unit hasn't been determined, although Interpublic said IPR will remain independent and will continue to be headed by Chairman Lord Chadlington; management teams at Shandwick and Golin/Harris will also remain in place.
NEW BOARD TO BE FORMED
A new board made up of representatives of Shandwick, Golin/Harris and Interpublic's Weber Public Relations Worldwide will be formed. Weber, which will also remain an independent brand, reports to Interpublic through McCann-Erickson Worldwide.
PR CAPABILITIES BOLSTERED
The purchase of IPR significantly boosts Interpublic's public relations capabilities. Weber was the 10th-largest PR agency when rated by revenue in 1997, according to publisher J.R. O'Dwyer Co.
Wall Street had little reaction to the deal. On the day it was announced, Interpublic's stock dipped slightly to close at $62.69.
The top-ranked PR agency, Burson-Marsteller, is owned by Young & Rubicam. Omnicom Group bolstered its PR capabilities significantly last year when it added Fleishman-Hillard to a portfolio that also includes Porter Novelli and Ketchum PR. WPP Group is parent of PR powerhouse Hill & Knowlton.
"We have a very viable [PR] group" with the purchase, said Interpublic Chairman-CEO Philip Geier. He said Interpublic will rank in the "top two or three" in PR capabilities when the deal is completed.
The public relations arena has been hot for holding companies as agencies continue to look to increase integrated marketing capabilities and boost revenues.
The public relations business is growing at a faster clip than the advertising business in the U.S., according to at least one industry observer.
Mr. Geier said the increase in client globalization was a main push in acquiring IPR, noting, "We look upon this as an area where the agencies' clients can benefit."
"Corporations today, at the top are starting to look at what they stand for for their constituents," Mr. Geier said, adding marketers are striving to make an impression on "constituents outside their home base."
With IPR being sold, Edelman Public Relations Worldwide becomes the largest independent PR agency.