Sorrell Pays $60 Million for CHI, but That's Money Well Spent

Emma Hall From London

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A major global power struggle has been playing out in London in the last couple of months, culminating in WPP Group's much-talked-about purchase of a 49.9% stake in coveted local creative shop, Clemmow Hornby Inge.

Martin Sorrell paid a premium -- $60 million -- but he must have enjoyed the thrill of snapping up an agency that has been courted by rivals Omnicom Group, Dentsu and, most publicly, Havas.
Emma Hall
Emma Hall is Advertising Age's London reporter and observer of the UK advertising scene.

Havas Group Chairman Vincent Bollore had been trying to buy CHI since last summer, employing the same dogged tactics he has been using on Aegis shareholders in the last year. But Havas insiders maintain Mr. Bollore already had pulled out of the talks because CHI wouldn't sell a majority stake, clearing the way for WPP. There also was the issue of a clash between Havas' Peugeot Citroen and CHI's Toyota business.

The hot competition ensured CHI got a good deal, but WPP also got what it wanted: The holding company has paid to bring a credible agency into the fold (if not under its thumb) with the ambition to build the sort of micronetwork United was meant to be. The CHI deal is a great face-saver for WPP, which recently suffered the indignity of defeat when it closed the London office of United.

In the past six years, founders Simon Clemmow, Johnny Hornby and Charles Inge have built a hugely successful agency with a distinguished creative pedigree. Expansion into the U.S. via an alliance between CHI founding client Carphone Warehouse and Best Buy looks like a shoo-in for the Brits, and with WPP's obvious global credentials (particularly in media), CHI now has a strong choice of partners in every territory.

In Mr. Hornby, Mr. Sorrell has found a formidable industry partner whose roguish enthusiasm must complement Mr. Sorrell's wry sense of humor and buttoned-down devotion to duty. The two have been sparring since the first time they met, when Mr. Hornby stole Mr. Sorrell's sacred BlackBerry for the evening.

It will be interesting to see how the game develops. Already it looks like a win-win situation: The week the deal was announced, CHI won a global project for Samsung. That's the same Samsung that dumped WPP Group's JWT and Berlin Cameron United 18 months ago.
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