WPP to take stake as Japanese agencies merge

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TOKYO -- Two of Japan's top second- tier advertising firms, Asatsu Inc. and Dai-Ichi Kikaku, said July 30 they will merge next January 1 to form one of the largest agencies in the country.

The new agency is aiming to post sales of $2.61 billion in the year to December 2000, the companies said in a statement. This would make the new agency the third largest in Japan, behind Dentsu Inc. and Hakuhodo Inc., in terms of billings. Asatsu President Tsutomu Takeda will be the head of the new agency, which will keep the Asatsu name.

The move is expected to intensify competition in the Japanese advertising industry, which is bracing itself for a downturn because of Japan's moribund economy.

The two Japanese firms will also seek a working relationship that includes capital and business tieups with the London-based WPP Group plc. No formal decision has been made about the size of WPP's participation.

News of the merger caused the Tokyo Stock Exchange to suspend trading in Asatsu shares early Thursday.

"The advertising industry is entering an era of mega-competition worldwide. Through the planned merger and tie-up with WPP group, we aim to ensure business expansion," says Mr. Takeda, according to a Reuters report.

Copyright July 1998, Crain Communications Inc.

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