"After everything else people in the U.S. may have heard or read about Publicis, this is a sign that we indeed have a serious and coherent development strategy," Mr. Levy said last week. "So, we'll continue making similar acquisitions to this one in the U.S. and other markets where necessary, at our own pace and as opportunities arise."
YEARS OF FLIRTING
Mr. Riney, who will remain chairman of the renamed Publicis Hal Riney & Partners, finally allowed his San Francisco-based agency to be won after years of flirting with potential buyers.
"Actually, we did feel a need to eventually link up with somebody bigger," said Mr. Riney, whose agency did not have the global resources to meet the needs of such clients as General Motors Corp.'s Saturn Corp., which picked a local shop to handle its launch in Japan.
Within two days of announcing the deal, Mr. Riney said he had an offer from Publicis to share a client.
"The signs are good," he said.
Riney also faced a challenge in deciding whether to offer such services as direct marketing and public relations.
Although Mr. Levy said another multinational agency network tried to derail his talks with Riney earlier this year, Mr. Riney denied that.
Riney, with 350 employees and headquarters in San Francisco, has a Chicago office-Hal Riney & Partners/Heartland-and offices in New York and Atlanta. In addition to Saturn, its clients include America West Airlines, Sprint PCS and First Union Corp.
The agency will be operated independently of Publicis/Bloom, Dallas and New York.
SALE PRICE: $70 MIL?
Details of the deal were not immediately made public, but Mr. Levy said Riney had revenue of $72 million last year. Riney Exec VP-Chief Financial Officer Lyn Muegge said reports of a sale price as high as $90 million were "a tad high." If the agency sold in the $70 million range, the price would be consistent with the industry standard of one times revenue and would not represent a premium.
Mr. Riney, 65, and two of his top lieutenants-Scott Marshall, president since August 1995, and Ms. Muegge-agreed to stay with the agency for a minimum of three years.
"I don't have any particular timetable" for retirement, Mr. Riney said, adding that he "probably will stay longer than" three years.
The Riney purchase signals Publicis' post-True North strategy of growth through selective agency purchases instead of acquisition of a second agency network.
"What we needed was critical mass, and to establish a certain profile," Mr. Levy said, referring to his bruising battle last year to take control of True North after opposing its deal to acquire Bozell, Jacobs, Kenyon & Eckhardt.
"We didn't need a second network, which is all that Bozell constitutes," he said. "My position on this, therefore, remains constant: Publicis is not thinking in terms of networks, but rather what future partners will help it achieve its development goals."
Mr. Levy refused to discuss rumors he has had talks with EvansGroup, Salt Lake City, an agency with close to $350 million in billings. But he said money is not a factor in future acquisitions.
"All options are open to finance our expansion. We might turn to debt, or we could sell some assets," he said. "I have received a lot of offers to buy the 11% of True North stock that Publicis holds, but to this date we have made no decision about how, when or to whom we may or may not sell our holdings in True North."
RINEY EXECS ELATED
Mr. Riney is not the only beneficiary of the all-cash transaction. The sale announcement, read at an employee meeting by Mr. Marshall because Mr. Riney had lost his famous voice to a cold, elated dozens of San Francisco ad executives and agency employees who are anticipating windfalls of varying degrees.
More than one-third of the company, 37.5%, was owned by the shop's Employee Stock Option Plan, with shares currently valued at $26 each but likely to be worth significantly more based on the sale price.
Significant chunks of the shop are owned by about a half-dozen individuals who hold premium stakes-"people who have some pieces of the place," said Mr. Riney. In addition to Mr. Riney, Mr. Marshall and Ms. Muegge, they include Jim Travis, an ad executive Mr. Riney met while working on Ronald Reagan's 1984 presidential campaign.
Mr. Travis helped finance Mr. Riney's buyback of the agency from Ogilvy & Mather in 1986. Mr. Travis, who will step down as agency VP when the deal is completed, said he was "delighted" with the deal.
Other premium payouts are expected to go to Jerry Andelin, senior VP-creative director; Bruce Campbell, a Riney veteran who's now creative director at TBWA Chiat/Day, San Francisco; and John Yost, a former Riney general manager who left to start Black Rocket.
"I'm not going to get rich on this," said Mr. Riney, who owns an island off Honduras. "If my voice got better, I could make more" doing voice-overs.
The sale comes at a time when the 12-year-old agency, with $700 million in billings, faces new challenges, particularly for Saturn Corp., its largest and most prestigious client.
"Hal and Scott assured us nothing is going to change from our standpoint," said Joe Kennedy, Saturn VP-sales, service and marketing.
Mr. Kennedy said the auto marketer has no concerns about Publicis/Bloom's handling of BMW of North America regional dealer groups-because both agencies will remain separate-or about Publicis' handling of French carmaker Renault.
Still, Saturn is facing declining sales in its small-car segment. Sales slid in 1997 by nearly 10% and are still falling this year.
"It's a tremendous, effective partnership," said Mr. Kennedy.
Mr. Riney said "tales of gloom and doom" at Saturn are exaggerated. "Saturn needs to bring out more cars," he said. "I'm not Saturn. I'm only an ad agency."
Contributing: Jean Halliday