I'm admittedly going out on a limb. This column goes to press mid-week and by the time it gets published there's a chance the limb will have already cracked. Or (since Y&R's board was scheduled to meet late last week) that this prediction will be old news.
But let's have a go at it nonetheless.
Whether or not you agree with Martin Sorrell's tactics, you've got to acknowledge his brilliance when it comes to the art of the deal. This man makes Donald Trump look like an e-Bay amateur. For more than a year, Sir Martin made no secret of his interest in Y&R. He said--quite openly--that he saw the two companies as a good strategic and philosophical fit.
Example: Sir Martin participated last year in an on-the-record Advertising Age roundtable discussion on the future of advertising. Also present was Peter Georgescu, then CEO of Y&R (and since retired). After the first question, Sir Martin said, "I have three answers to that," and proceeded to tick them off. After the second question, he did the same thing.
"Martin," Georgescu suddenly said, "do you have three answers for everything."
"Not yet, Peter," Sorrell said, with more than a hint of playful mischief. "Not yet."
If all goes as planned, Sorrell soon will have three answers to client questions about WPP's global agency networks.
Y&R has eyed alternatives, including a $2 billion acquisition of Harte-Hanks that would (a) make the company much fatter, more expensive and therefore more difficult for WPP to easily acquire, and (b) bulk up Y&R's database marketing capabilities and, in theory, lessen the need for the agency to tap the resources of a larger parent company.
Still, pressure to accept a WPP offer--which would leave WPP shareholders with about two-thirds of the stock in the new combined company and Y&R shareholders with the remaining one third--has got to be growing.
Y&R is already troubled by the recent Army and Citibank reviews, and the sale saga has effectively divided and paralyzed the company. The WPP offer (and the revelation of the $60 million golden parachutes that would open for top managers) exacerbated a split within the company between supporters of CEO Tom Bell, who is said to oppose a WPP deal, and those who want a deal to get done, if only to make some money.
On top of that, Y&R has got to know that clients, employees and prospective employees are locked in a holding pattern waiting for a resolution.
Sir Martin is sometimes villainized on this side of the pond, largely a result of lingering emotions linked to his hostile late-'80s takeovers of Ogilvy & Mather and J. Walter Thompson. One agency CEO described Sorrell's approach to Y&R as that of a predator "stalking" his prey.
But if you look at WPP's track record since those buys, there's less to criticize. He did not trample on the cultures of Ogilvy or JWT, and in fact both have grown significantly in the last decade. He also didn't break those companies into little pieces and sell them off for parts.
Although it's a legitimate concern for Y&R, there's no indication Sir Martin would dismantle that company's integrated marketing setup since both of WPP's existing networks have embraced similar strategies.
Americans may not be thrilled to see a London-based advertising company emerge as the world's largest. But emotions and patriotism aside, there's really little argument to make against this deal.