OMNICOM UNITS FORM $80 MIL INTERACTIVE SHOP: SCALE AN ISSUE IN AGENCY.COM, EAGLE RIVER COMBINATION

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Agency.com, New York, is merging with Eagle River Interactive, Chicago, in a deal that will create one of the largest interactive agencies in the U.S.

The new agency will have 575 people; 11 offices in the U.S. and abroad; and projected revenue of $80 million this year.

Both are under Omnicom Group's Communicade umbrella; Omnicom will be a major shareholder of the joined company.

The Agency.com name will be retained, with Eagle River offices in Avon, Colo.; Chicago; Dallas; Portland, Ore.; and Paris becoming Agency.com outposts. Eagle River's Mountain View, Calif., shop will be merged with Agency.com, San Francisco, and its New York office with Agency.com in that city.

SUH REMAINS CHAIRMAN

Chan Suh will continue as CEO of Agency.com and Kevin Rowe, formerly president of Eagle River, will become president of Agency.com, North America.

Agency.com and Eagle River met through their Omnicom association and became closer when they pitched Compaq Computer Corp.'s interactive business together and won. After working on the account for about six weeks, both agencies decided a merger was in their best interest.

"Scale is becoming an issue. Most of the big companies are narrowing down the number of interactive firms they're using," said Mr. Rowe.

He also listed a wider scope of services and geographic reach plus the varied skill sets each company brings as compelling reasons for the merger.

Agency.com has been on an acquisition roll lately, acquiring Online Magic, London, in May and both Interactive Solutions, Boston, and Spiral Media, New York, in June.

SIMILAR CULTURES

"We are bucking the trend of these little roll-ups. We're consolidating, not rolling up," said Mr. Suh.

"In a roll-up, you buy this or that and say our combined value is better. We're saying we're forming one company with all these people. I think that we're lucky enough in that our cultures are very similar."

Art Williams, president-CEO of Spiral Media and exec VP-operations for Agency.com, will oversee merger integration.

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