McKinney, parent MarchFirst to part

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McKinney & Silver, the Raleigh, N.C.-based agency owned by troubled MarchFirst, is up for sale, said an executive close to the situation. MarchFirst, the floundering Web professional services company, is looking to cut costs by finding a buyer for the agency, and McKinney is conducting its own search for a new parent, said the executive.

MarchFirst denied a sale is imminent. "There is no such transaction at the moment," said Ken Kinsella, VP in charge of strategic expansion. However, he didn't rule out a sale in the future. "We're going to line up every single part of our business in the next six months and look at what is and is not strategic to MarchFirst," Mr. Kinsella said. "Divestiture of assets is something that we're considering in our workout plan."

McKinney President-CEO Don Maurer declined to comment. McKinney had 1999 gross income of $22.5 million and came in 94th on Advertising Age's agency rankings. Major clients include Volkswagen's Audi of America, expected to spend $150 million next year, and XO Communications, expected to spend $50 million next year.

Two logical suitors would be Havas' Arnold Worldwide, Boston, and Omnicom Group. Arnold handles Volkswagen in the U.S.; Omnicom's DDB Worldwide has ties to VW globally. Some observers say Omnicom is not interested; a spokeswoman declined to comment. Arnold wasn't available at deadline.

Prior to MarchFirst's creation, McKinney was owned by USWeb/CKS, the company resulting from USWeb Corp.'s 1998 merger with CKS Group. CKS Group bought McKinney in January 1997 for stock worth $30.3 million. On March 1, 2000, USWeb/CKS merged with Whittman-Hart to create MarchFirst. McKinney created a quirky TV campaign intended to build MarchFirst's brand.

Recently, though, MarchFirst has suffered well-publicized financial setbacks. On Nov. 28, in the wake of lowered third-quarter results, the company announced it would significantly revise its business strategy. Several weeks before, on Nov. 13, MarchFirst announced it was laying off 1,000 workers, about 10% of its work force. Its stock is currently selling for less than $2 a share, down from a high last December of more than $81.

Separately at McKinney, Andrew Delbridge, 40, was named senior VP-executive director of account planning, from chief executive of Publicis Communication New Zealand.

Copyright December 2000, Crain Communications Inc.

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