OMNICOM TO SNARE FLEISHMAN: $85 MIL-PLUS PURCHASE WILL MAKE HOLDING COMPANY NO. 1 IN PR

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Omnicom Group is expected to announce as early as this week an agreement to acquire Fleishman Hillard for between $85 million and $100 million.

With the acquisition, Omnicom will pass Young & Rubicam as the world's largest supplier of public relations services, with an estimated $300 million-plus in fee income.

St. Louis-based Fleishman Hillard is currently the world's sixth-ranked PR agency, with $107.4 million in fee income; Omnicom already owns No. 4 Porter/Novelli and No. 7 Ketchum PR.

2 PR SHOPS TO COMBINE?

Executives with knowledge of the deal said Omnicom is considering some sort of combination of Fleishman Hillard and Porter/Novelli, perhaps through a marriage of the names or full merger of the units.

Fleishman Hillard and Porter/Novelli are among the fastest growing PR agencies, with fee income increases of 20% and 25%, respectively, last year.

Y&R's Burson-Marsteller in 1996 was No. 1 in fee income, at $233 million. It was followed by Shandwick, with $190 million; WPP Group's Hill & Knowlton, with $160.8 million; Porter/Novelli, with $121.1 million; and Edelman Public Relations Worldwide, with $111.6 million, says J.R. O'Dwyer Co.

Neither Omnicom nor Fleishman Hillard executives could be reached for comment last week.

Just last month, Fleishman Hillard Chairman-CEO John Graham denied the company was for sale but acknowledged it had retained investment banking boutique Cari Capital. At the time, he said Cari was merely helping Fleishman Hillard assess its value in the marketplace (AA, March 17).

Interpublic Group of Cos. was also interested in Fleishman Hillard but is said to have withdrawn after it became clear it would not be the winner. Interpublic Chairman-CEO Philip H. Geier declined comment.

A-B USES FLEISHMAN, NEEDHAM

Fleishman Hillard's largest client is Anheuser-Busch Cos., also a major client of Omnicom's DDB Needham Worldwide.

The beer marketer generates about 10% of Fleishman Hillard's revenue, said executives familiar with the PR agency. Its second-largest client is said to be SBC Communications.

With the acquisition, Edelman will be the largest remaining independent in the PR business, which could make Edelman an acquisition target because of its growth rates and the recognition of PR as an important component of the

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