The surprise acquisition of Fitch’s holding company Lighthouse Global Network by Cordiant Communications Group will do more than create the tenth largest global marketing and advertising group.
The £392m deal is the latest in a series of recent high profile additions to Cordiant’s rapidly expanding design and branding arm, one which will continue to grow. Only last month it acquired the number nine independent UK design group, PSD Associates (DW Top 100 Consultancy Survey, 31 March). Now, at a stroke, the latest deal gives Cordiant seven more design groups with a combined revenue of £48m in 1999. And it looks upon Fitch as the jewel in the crown.
“All our senior management have wanted to get more serious in this area [of design and branding] for some time,” says Cordiant Communications Group chief executive Michael Bungey. He explains that interest in the sector stems from swelling revenues in branding and design. “We see endless amounts of revenue slipping through our fingers,” he says.
Fitch’s new owner is set to write the next chapter of the company legacy, one that has already eclipsed Lighthouse’s own. Cordiant plans to “consolidate into Fitch” most, if not all of its design businesses, including PSD and possibly events and exhibitions specialist HP:ICM. It would then look to grow the Fitch brand as its newly acquired “design and branding stream”. The deal could technically be deemed to return ownership of the consultancy to UK shores – Cordiant is, for the time being at least, a UK concern. Fitch staff are unable to comment at the present time.
“Although it is still early days and the deal will not be concluded for about six weeks, we feel that we could build a global design brand using Fitch,” says Bungey, adding that no firm discussions have been initiated at this stage.
Further acquisitions are likely in the marketing services sector, particularly in branding, adds Bungey. There are “one or two areas [of design] we need to strengthen”, he says, but the short term will be about integrating its acquisitions into the network.
For its part, Lighthouse Holdings’ motives are perhaps a little surprising. While once Lighthouse’s private investors may have been assured of seeing LGN floated on the stock market, jumpy stock market conditions seem to have prevented it from taking an IPO route this year.
The trade sale, while safeguarding the interests of Lighthouse investors, will fail to secure a future for Lighthouse executives, however. “Only one or two” will be taken on by Cordiant, according to Bungey. Lighthouse president and former Fitch chairman Martin Beck will undoubtedly take the opportunity to retire, having suffered from bad health for some time.
Cordiant, meanwhile claims its design and branding activity would have made its new Fitch group worth £59m in 1999, putting it at number two behind Enterprise IG in Design Week’s global tables, excluding Landor Associates.
Before de-merging the two in 1997, Cordiant was the parent group to the Bates Worldwide and Saatchi & Saatchi advertising networks. It now consists of Bates (incorporating marketing group 141 Worldwide) and Zenith Media, of which it owns 50 per cent. Design interests include HP:ICM and a share of The Facilities Group – including Saatchi & Saatchi Design, Sector Light Design and Red Kite New Media – in which it owns 30 per cent, alongside Saatchi & Saatchi.
By buying Lighthouse, Cordiant comes close to fulfiling two of its three key business objectives in one fell swoop: to grow marketing services to 50 per cent of combined revenues and to increase its US revenue to a 40 per cent share of its total. The takeover boosts its marketing services portfolio from 32 to 47 per cent, while growing its share of US work from 27 to 35 per cent. Time will tell whether Cordiant’s third key objective, to increase its share of multinational clients to account for 45 per cent of business, benefits as a result.
This latest round of consolidation may be no bad thing if Cordiant keeps to plans for growing a global design facility. What may amount to the end of Lighthouse may mark the next round in the life story of Fitch, even though Beck did rule out selling Fitch to a global network just over a year ago (DW 2 April 1999).
Cordiant Communications Group
Advertising and media
Design and Branding
Lighthouse’s design and branding arm
1999 – turnover £48m
Fitch – 415 people in seven offices
Leonhardt – brand and corporate communications (US)
AAD – interiors and architectural group (US)
Primo Angeli – packaging and branding group (US)
Ideascope – strategic consultant (US)
C&FD – corporate and financial literature (UK)
Avid – live events group (US)