WPP ACQUIRES 49% OF LONDON'S HHCL AGENCY

British Shop to Become Hub of New European Network

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LONDON (AdAge.com) -- A minority stake in HHCL and Partners, regarded as one of London's most successful agencies in the 1990s, has been sold by Chime Communications to WPP Group, which will make HHCL the European "heart" of its fourth advertising network in Europe.

WPP has agreed to pay approximately $5.6 million in cash for the 49% stake plus an additional $800,000 in cash if HHCL hits certain financial targets by the end of the year.

Chime will seek shareholder approval for the transaction on Feb. 4. WPP already holds a 20% stake in Chime Communications.

Enters Red Cell network
Under the terms of the deal, WPP's Red Cell network will take hold of 49% of HHCL and Partners, with Chime retaining 51%. However, management control of HHCL will go to Red Cell, with the agency reporting in to Lee Daley, Red Cell's CEO. Mr. Daley will become chairman of HHCL/Red Cell and work alongside Steve Henry, HHCL's founder and creative director; Nick Howarth, managing director; and the existing managing partners Minnie Moll, Richard Huntington, Al Young, Sid McGrath and Mark Coldham.

The deal will significantly bolster the $1 billion Red Cell network's credentials in the key London market.

In the last 12 months Berlin Cameron in New York, Les Ouvriers du Paradis in Paris and consumer insights consultancy HeadlightVision have become part of Red Cell.

Moving offices
Red Cell's current operation

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in London, Red Cell London, will be merged into HHCL this month. Mr. Daley will take his London-based Red Cell team along with HeadlightVision and move into HHCL's premises. "We are creating a unique communications house in London; a culture factory," he said.

"Having a strong base in London was always key to the redesign of our network," Mr. Daley said. "It has all the right ingredients for growth, both within the U.K. market and internationally -- strong blue chip clients, senior and experienced management and high-quality, next generation talent."

WPP's other networks are Ogilvy & Mather Worldwide, J. Walter Thompson Co. and Young & Rubicam.

International expansion
For HHCL, the arrangement can lead to international expansion without changing its culture. "We have long been thinking of the best way to establish HHCL internationally," Mr. Howarth said. "However, the more traditional agency networks have held no appeal for us because of their tendency to dilute diversity rather than celebrate it."

Lord Bell, chairman of Chime, said: "This deal fulfills the strategy we set out at the beginning of 2002. We believe that Chime will benefit by making HHCL part of the new Red Cell worldwide network. International clients need inspired strategic thinking and impactful creative work. These are the lynchpins of HHCL's reputation."

Red Cell is currently present in 29 offices worldwide, with business covering advertising, brand and marketing consultancy, design, direct marketing, sales promotion and digital and interactive communication. Clients include Alfa Romeo, Aventis, Diageo, Hewlett-Packard Co., Guinness, Microsoft Corp., Nestle Purina Petcare Co., Nike, Nikon, Nokia, Singapore Airlines, Singapore Tourist Board and Unilever.

As a combined group, Chime is ranked the No. 1 public relations group in the U.K. In addition to HHCL, Chime owns the ad agency Roose. Chime says it's ranked fifth in Europe's top public relations agencies and 15th in the world.

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