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Scott Gloom Settles Over Saatchi Search Is On For New Chairman While Moniker Change Pondered

By Published on .

Chaos and gloom darkened Saatchi & Saatchi Co. last week as talk circulated that investor Richard Humphreys might make another stab at buying Bates Worldwide, while ousted holding company Chairman Maurice Saatchi may have sold his remaining stake in Saatchi.

Amid this turmoil, the search was on for a new holding company name and a new chairman. One name that surfaced among Saatchi watchers as a long-shot candidate is Ogilvy & Mather Worldwide chief Charlotte Beers.

Saatchi's board last fall rejected Mr. Humphreys' reported $375 million offer for Bates. As the point man for South Korean media mogul W.Y. Choi, Mr. Humphreys put together the deal to buy N W Ayer & Partners. Hisstrategy would be to keep Bates and Ayer separate in the U.S. but use shared international resources. Bates has a strong overseas network, while Ayer is severing ties with minority-owned Ayer Europe, eliminating its international presence.

"I wouldn't like to comment," Mr. Humphreys said Friday.

Bates' value could be affected by its fate in the M&M/Mars candy and pet food review, triggered by company founder Forrest Mars' indignation about Mr. Saatchi's ouster last month.

Non-roster agencies O&M and BBDO Worldwide pitched last week at the marketer's invitation. But an O&M spokesman said they discussed only the pet food portion.

Saatchi networks Bates and Saatchi & Saatchi Advertising Worldwide are offering to set up a joint free standing unit to serve the $350 million business. And Saatchi & Saatchi Chief Executive Charles Scott is making a rare visit to Mr. Mars.

Mr. Saatchi's rumored sale of his 890,000 Saatchi shares-out of a total 220 million in issue-followed a bitter letter he sent to his former staff last week.

Saatchi is expected to base its severance offer on Mr. Saatchi's final salary of $300,000, with 21/2 years remaining on his contract. That would total $750,000, plus a bonus and possible compensation if Mr. Saatchi agrees not to steal clients or staff.

But Mr. Saatchi gave up a higher salary in return for the board's promise to grant him generous stock options, so he's likely to want much more.

"There will be litigation," one Saatchi watcher predicted.

In the chairman search, the company is believed to have ruled out existing Saatchi executives. One insider said Ms. Beers, chairman-CEO of O&M Worldwide, is likely to be approached.

Ms. Beers, who met last week with Mars to discuss the account review, despite the fact that Hershey Corp. is a longtime O&M client generating billings of about $75 million, has high-level connections at M&M/Mars and Procter & Gamble Co. Her first job was at Mars; she's close to Forrest and John Mars. Ms. Beers is also close to P&G Chairman-CEO Edwin Artzt from her days of running P&G agency Tatham Euro RSCG.

After a new chairman is appointed-it's hoped by the annual general meeting in May-new faces are also likely on the board.

Sir Peter Walters may leave when his term expires this year. The U.K. businessman was recruited for the board by Mr. Saatchi, and is said to be traumatized by his unwitting role in Mr. Saatchi's downfall as head of the remuneration committee that drafted the stock option proposal that helped spark shareholders' ire.

It's still unknown what Mr. Saatchi plans for the future. Speculation has centered on his starting a new agency, acquiring an existing agency, linking with another agency or starting an innovative communications consultancy.

Charles Saatchi has still not been heard from, despite intense speculation that he will follow his brother.

Last week, the brothers were said to be scouting office space in London.

David Herro, the partner at Saatchi shareholder Harris Associates responsible for the shareholder uprising, expects minimal client fallout.

"It's a strong company; it's withstood more than this," Mr. Herro said.

He also downplayed the likelihood of high-level defections by Mr. Saatchi's longtime allies including Saatchi & Saatchi North America CEO Bill Muirhead and acting Chairman Jeremy Sinclair, also a confidante of Charles Saatchi. Mr. Muirhead, on a ski trip last week, couldn't be reached.

"If anything, [Mr. Saatchi's removal] should show employees of the company how committed the shareholders are to the employees," Mr. Herro said.

Those employees will end up working for a holding company that has expunged the Saatchi name. No potential new monikers are circulating yet. Saatchi corporate design unit Siegel & Gale is working on that. The unit came up with the name Bates Worldwide to replace Backer Spielvogel Bates last year.

Siegel is one of the few non-ad agency entities left in the Saatchi family. Most of the others have been sold off during the company's long financial miseries.

When asked about a new name, Mr. Herro joked, "Acme Advertising?" then added: "What we call this bundle isn't what's important. It's what's in the bundle."

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