Shareholder wallets set to fatten as BBDO ups its stakes in Clemenger Group

In a deal estimated to be worth A$150 million, BBDO Worldwide, the advertising network of global marketing beast Omnicom Group, is hoping to increase its shareholding in the Clemenger Group from 46.67 percent to 73.67 percent as part of an increased focus on the Asia-Pacific region.

Clemenger Group chief executive Jim Moser, Colenso’s managing director Nick Garrett and a few other Kiwi bigwigs are in Sydney at the moment for the requisite meetings and couldn’t be contacted about whether the deal would affect New Zealand companies with Clems associations, such as Colenso BBDO, Clemenger BBDO, OMD, SparkPHD and Porter Novelli. But Robert Morgan, executive chairman of Clemenger, said in a release the proposal is a win win that will strengthen ties between the businesses and dramatically enhance the group’s capabilities.

“It is particularly gratifying to see the original architects of the relationship going back to 1973 —Bruce Crawford, now chairman of Omnicom and Peter Clemenger — still linked to the companies and both being involved in us taking this next step,” he says.

BBDO’s planned stake upgrade has come on the back of a desire to ramp up its presence in the Asia-Pacific region, one of the few regions with some economic wind in its sails at present, and the knowledge gained by Clemenger in Australasia is seen as being integral to that strategy.

Shareholders still have to vote on the whether they want the extra kerching! at a meeting to be held later in the year and the deal still has to go through the Federal Court in Australia. There are a few other conditions to be met, too, including, if required, approval by the Overseas Investment Office of New Zealand.

If the deal does go through, BBDO will acquire one Clemenger share for every two Clemenger shares not held by BBDO, which is an offer of $6.43 cash per share. According to the Sydney Morning Herald, this is a significant premium on the company’s share price, which the privately held company that owns 44 marketing services businesses in Australia and New Zealand and reported profits after tax of $29 million, recently set at $3.75.

Andrew Robertson, president and chief executive of BBDO Worldwide, says the deal is all about setting both parties up for accelerated growth.

“For 37 years BBDO Worldwide has had an incredibly effective partnership with Clemenger BBDO and the Proximity agencies in particular. It has worked well for our global clients, and the work done by the very talented people in these agencies has helped strengthen our reputation, and solidify our position, as the world’s most awarded network.

“For as long as this partnership was supported by a minority ownership position, it was neither in the interests of BBDO Worldwide nor of Clemenger Group’s other shareholders to leverage the extraordinary companies and individual talents that make up the group outside the borders of Australasia … With this move it will be in everybody’s interest to leverage these companies and this talent dramatically across the broader Asia Pacific region, and elsewhere in the world.”

While the company wouldn’t be Australian owned anymore, something B&T magazine says was something it played heavily on, John Wren, president and chief executive of Omnicom, says a key ingredient to the proposal is that 25 percent of the company was to remain in local ownership.

“A large element of Clemenger’s enduring success has been employee equity participation. We believe perpetuation of employee ownership is fundamental to their success. Continued local ownership is imperative to maintain the great team of people which the Group employs. We are keen on sustaining momentum by adding additional support and access to capital.”

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