Publicis eyes FCA/Saatchi merger

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Publicis Groupe is looking at merging its stalled second European network, FCA!BMZ, with Publicis-owned Saatchi & Saatchi to give Saatchi a boost in the region.

"We are actively seeking to improve the position of Saatchi & Saatchi across Europe," said Jean-Paul Morin, Publicis' general secretary. "There are a number of ideas on the table for doing this, none of which have been finalized."

How much FCA!BMZ would help Saatchi isn't entirely clear. An analyst in France last week described FCA!BMZ as "an empty shell." Last year, Publicis talked about folding FCA!BMZ into the Publicis network.

Mr. Morin, formerly Publicis' chief financial officer, was appointed by Chairman-CEO Maurice Levy to oversee the integration of Saatchi into Publicis as well as international expansion strategy and acquisitions (AA, Oct. 9). Publicis bought Saatchi in September for $2 billion.

No timetable has been set for merging the agencies nor has a decision been made about whether the networks would merge in the eight countries where FCA!BMZ operates. The network doesn't operate in the U.S.

A merger between the two networks would probably lift Saatchi only one slot, from No. 15 to No. 14, to pass Bates Worldwide, according to Ad Age figures. And it raises conflict issues with Saatchi's two biggest worldwide clients, Procter & Gamble Co. and Toyota Motor Corp.

HENKEL-P&G CONFLICT?

Almost half of FCA!BMZ's approximately $70 million in gross income on billings of about $450 million comes from its German agency, which bears the rather confusing name of BMZ!FCA. One of its biggest clients is P&G rival Henkel, whose Schwarzkopf & Henkel oral-care products BMZ!FCA handles. An agency executive said P&G has grown more lenient and will tolerate its agencies working for competitors in other categories. Saatchi is primarily a detergent, diaper and skincare agency for P&G in Europe and handles no oral care products.

George Baums, chairman of BMZ!FCA, Duesseldorf, said Schwarzkopf & Henkel was informed about the likely merger with Saatchi several weeks ago and raised no objections to sharing an agency with P&G.

Despite being an international Toyota agency, Saatchi has handled Volkswagen's Audi in Germany for the past two years. A BMZ!FCA subsidiary in Germany, More Sales, handles some direct marketing and brochure business for Toyota. It was unclear how this conflict would be handled, though there was speculation Saatchi will have to resign the Audi account in Germany.

In Europe, Saatchi was the only one of the top 25 networks to post a gross income drop in 1999, slipping 1.4%, while other networks averaged growth of 10% or more.

But Germany, where BMZ!FCA ranks 19th compared to Saatchi's No. 22, is the only country where the FCA!BMZ network would be of much help to Saatchi.

Even before the Saatchi acquisition, Publicis had decided the FCA!BMZ network couldn't survive on its own and was in a fairly advanced stage of combining it with Publicis. Mr. Morin told Ad Age last year FCA!BMZ was being merged into Publicis. In fact, he objected to FCA!BMZ being listed separately in Ad Age's agency rankings and insisted that the network's 1999 gross income be added to Publicis' figures.

It was unclear whether the FCA!BMZ name would disappear in Europe. In Germany, for example, Saatchi is based in Frankfurt and BMZ!FCA in Duesseldorf, so the offices would not physically merge even if both bear the Saatchi name.

"We're talking about it," Mr. Baums said.

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