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LONDON- Saatchi & Saatchi Co. is ripe for a takeover.

The disastrous loss of the $400 million Mars business-possibly the largest account ever snatched from one company-and other misfortunes will wipe out the growth anticipated at Saatchi for 1995.

"They are very vulnerable to a takeover," said David Herro, the Harris Associates partner who led the December revolt against former Saatchi Chairman Maurice Saatchi. "The stock is dirt cheap."

Analysts are slashing $15 million from their pretax profit forecasts for Saatchi this year. New forecasts put profits close to $48 million, about the same figure the company is expected to announce in March for 1994. Since January, Saatchi's share price has dropped about 36% to 41/2 on the New York Stock Exchange.

The reshuffling of Mars' entire $850 million account left its biggest agency, Saatchi unit Bates Worldwide, out in the cold as punishment for Mr. Saatchi's ouster. Bates handled almost all of Saatchi's Mars business worldwide; Saatchi & Saatchi Advertising had about $25 million.

BBDO Worldwide and Grey Advertising join the Mars team with $250 million each in spending, and D'Arcy Masius Benton & Bowles, already on the candy giant's roster, received additional assignments.

More bad news is looming for Saatchi. Saatchi & Saatchi Advertising is likely to lose the $135 million British Airways account after a four-way pitch in April. The company also faces mounting legal bills from numerous suits against Mr. Saatchi and three other top executives who left in January to join him in a new agency.

"I don't think Saatchi is going to have much fun for a while, but I don't think they're going to die from it," said PaineWebber analyst Alan Gottesman.

Maurice Saatchi can congratulate himself on provoking Mars' vengeful move to drop Saatchi after Forrest Mars Jr. cautioned the company last year against ousting Mr. Saatchi. Mr. Mars phoned to repeat the warning during the marathon Dec. 16 board meeting that decided Mr. Saatchi's fate.

"The significant change in management prompted us to see what alternatives we might have, and we found some very attractive fits," said John Murray, staff officer for franchise at M&M/Mars in McLean, Va., responsible for worldwide marketing.

It's unlikely Mr. Saatchi could raise the estimated $750 million needed to regain the holding company, alone or in concert with his brother Charles or other allies. But the brothers have always been most interested in the Saatchi agency they founded 25 years ago, and that unit-without Bates or the other parts of the empire-could be bought for considerably less.

Otherwise, Mr. Saatchi must hope for an alliancewith an agency network if his New Saatchi Agency is to quickly gain global capabilities. Without global reach, the best he can hope for against his rivals is revenge.

"We've certainly covered our short-term core international needs," Mr. Murray said in answering questions about Mr. Saatchi's chance of being added to the Mars family of agencies. But many local brands in the U.S. and overseas are still unassigned.

Longtime Saatchi executives recalled that Mars, angered by Saatchi's acquisition of Bates, called an account review back in 1986 to punish Bates and Mr. Saatchi.

"Bates was fired from one or two brands for selling the business to Maurice Saatchi, who was the devil incarnate [then]," said a Saatchi executive. "Now they've been fired from all the business for not having him."

Saatchi said the Mars loss will cost the company $45 million a year in revenue. Hardest-hit Bates, responsible for about 95% of the Mars business in at least 40 countries, had total income of $543.9 million from billings of $4.3 billion.

Bates Worldwide CEO Michael Bungey insisted no Bates offices will close, but wouldn't discuss layoffs.

Mars represented more than half of Bates' business in Japan and "kept the lights on" in a number of other markets, Mr. Gottesman said. Mars accounted for 20% of Bates' $100 million billings in Germany, for example, but less than 3% in Australia.

"It's annoying to lose a client based on a personal relationship in London," said Alex Hamill, chairman of George Patterson Bates, Sydney.

BBDO and Grey both brought in the heavy hitters to buoy their pitches. BBDO Chairman-CEO Allen Rosenshine led his agency's pitch-and promised to run the account personally. Grey Chairman, President and CEO Ed Meyer headed the Grey effort.

BBDO scooped up M&M's, Snickers and Bounty brands and pet food. Grey got Pedigree pet food, Starburst, Opals fruit chews and Milky Way (outside the U.S.). DMB&B, with an estimated $250 million to $350 million in Mars billings, will handle Uncle Ben's rice, Whiskas cat food, and Mars, Milky Way (in the U.S. only) and Twix candy bars. Merkley Newman Harty, New York, will get the $15 million Kudos and 3 Musketeers brands (in the U.S. only) and more local assignments are expected.

It is unclear whether Zenith Media, Saatchi's centralized media buying unit, will keep its separate Mars contract in four European markets.

Before the Mars news last week, Saatchi announced the holding company name will change to Cordiant next month, pending shareholder approval. The Saatchi & Saatchi Advertising network will keep its name.

"It's very hard when you're trying to get new business," said Edward Wax, chairman-CEO of Saatchi & Saatchi Advertising. "For years we've had to live with the description of [Saatchi as] `financially troubled' and now we have to deal with `emotionally disturbed.'*"

Saatchi's next challenge-and its first face-to-face confrontation with Maurice Saatchi as a rival-will be the BA pitch. In the first round, Saatchi will be pitted against the New Saatchi Agency, J. Walter Thompson and Bartle Bogle Hegarty. Agency executives said a second round will be an "intimate fireside chat" with Robert Ayling, BA's managing director.

Saatchi may face the same problem with BA as Bates did with Mars. Like Forrest Mars Jr., BA Chairman Sir Colin Marshall called board members in support of Maurice Saatchi Dec. 16.

Insiders say Sir Colin told the Saatchi board he had discovered the shareholder support claimed by Mr. Herro was shaky, but was ignored.

"[Sir Colin] will remember that snub," one agency executive said. Also possibly working against Saatchi is the fact that BA Marketing Director Michael Batt left last week (see story on Page 4).

Meanwhile, Mr. Saatchi and his partners continue to search for an international alliance.

Young & Rubicam and Interpublic Group of Cos. are frequently mentioned, although both deny contact with Mr. Saatchi. Procter & Gamble Co., a Saatchi client, is believed to have told its other agencies, Leo Burnett Co., DMB&B and Grey, not to consider allying with Mr. Saatchi. While speculation is rife that Mr. Saatchi is seeking a reconciliation meeting with P&G, sources denied the rumor.M

Contributing to this story: Iris Cohen Selinger, Jan Jaben, Chuck Paustian, Charles Siler and Dagmar Mussey.

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