The investment is the result of WPP's acquisition of a holding company called Blugroup, which owned 14.4% of CIA. But because of CIA's recent share-placing to raise $27m to purchase MarMedia Group, one of Scandinavia's biggest media specialists, Blugroup's 14.4% share has actually fallen to 12.5%.
The move makes WPP CIA's third largest single shareholder, after Mercury Asset Management, the second biggest. CIA's directors and employees still own 37.5% of CIA. (Chairman Chris Ingram owns 20% of CIA, making him the single biggest individual shareholder).
Ingram commented: "As far as we're concerned, it's business as usual. We've been told (the WPP move) is purely an investment." In response to whether CIA and WPP are likely to form some kind of partnership, he added: "We're always considering alliances and joint ventures, if they will be of strategic benefit to the company, and not just for the sake of it." His ambition is to retain CIA's independence and make it one of the world's top six media agencies by 2001.
WPP's CIA share acquisition raises the question of whether there are any strategic plans to consolidate the media-buying interests of its networks. There have already been discussions between J Walter Thompson and Ogilvy & Mather about cooperating on media buying.
CIA's billings, currently standing at just under $3.5b from operations in Europe and the Far East, could be an asset should WPP want to boost further its media-buying credentials internationally.
Copyright June 1997, Crain Communications Inc.