WPP’s tempting offer

WPP has bought two more design groups, one of which is The Brand Union. Damian Schogger looks at the effects of the acquisition for WPP and its design consultancies

WPP’s expanding global empire has added two major elements in the past week, with the acquisition of The Brand Union in London and leading Scandinavian consultancy Brindfors Design.

During this year there has been a growing emphasis on design groups within WPP, with no less than five consultancies bought.

The ever-increasing influence of WPP’s existing design consultancies was reflected in the group’s 1999 interim results, which were released in August. They contributed to an 18 per cent growth in revenues for the organisation’s branding and identity, healthcare and specialist communications sector.

A month earlier WPP credited its design groups with a major contribution to the group’s 15 per cent worldwide profit growth in the first five months of this year.

In its capacity as parent company of Lambie-Nairn and Tutssels, The Brand Union employs 80 people and has an annual turnover of £12m. The group, which includes commercials production company The Clinic, had net assets of £1.3m as of 31 December 1998.

A research analyst at Credit Suisse First Boston estimates that the sale could be worth up to £25m. “WPP could easily have paid one and a half to two times the annual turnover of £12m. It is unlikely to have paid as much as three times the value, because WPP doesn’t like paying more than it needs to,” she says.

In a separate development, WPP’s global brand and identity consultancy Enterprise IG has strengthened its own European base with the acquisition of Scandinavia’s biggest design group, Brindfors Design.

The 25-strong consultancy, which will now be known as Brindfors Enterprise IG, has offices in Stockholm and Oslo. Among its major clients are SEB, Gant, Telia and Kraft.

Acknowledged as the world’s largest brand and identity group, Enterprise IG already has offices in London, Hamburg, New York, San Francisco, Tapei, Shanghai and Hong Kong, employing more than 500 people. This addition to its portfolio gives it its first foothold in Sweden and Norway.

Enterprise IG chief executive in Europe and Asia, Dave Allen, says: “The addition of Brindfors brings one of Europe’s leading creative gurus into the group. Its strategic task will be to build Enterprise IG into the dominant consultancy in Scandinavia.”

With regard to The Brand Union, WPP chief executive Martin Sorrell is “delighted” about the company joining the global communications group. “I have been a personal admirer of Lambie-Nairn’s consistently innovative and creative work for many years,” says Sorrell. “This move is a natural addition to our branding and identity portfolio. It is an incredible opportunity for WPP to strengthen its creative reputation and its offer of the very best in branding and identity to our clients worldwide.”

Lambie-Nairn creative director Martin Lambie-Nairn says the group received many previous acquisition offers before the WPP deal emerged.

“We have been approached by several services groups and advertising agencies over the past 15 years, at least once a yearä But we felt that the time and opportunity was now right,” he explains.

Lambie-Nairn believes joining “WPP’s worldwide network” will enable the group to “realise ambitious growth plans faster than our own resources would have allowed.

“Convergence between television and electronic media, as well as global market opportunities, have made it essential that we are positioned to flourish as a key player on an international stage. Through our new ownership we can now capitalise on WPP’s global reach,” he claims.

Lambie-Nairn marketing director Liz Dunning also highlights the importance of being “internationally represented”. She also believes the US digital TV market can be exploited. “Our immediate interest is the US market, though we will look at other international markets too.”

But Dunning says that Lambie-Nairn will “continue to function autonomously. We are a very different animal from Enterprise IG,” she says.

Tutssels executive creative director Glenn Tutssel is equally “excited” about the benefits that being a part of the WPP Group will bring. “We are building our strategic credentials on a well-established creative reputation and are looking forward to capitalising on the links within the group,” he says.

WPP chief executive officer of identity and design Europe Sam Sampson describes Tutssels as a “wonderful addition” to the group. “Glenn is an excellent designer and he and his team have clearly demonstrated their talent with numerous creative and design effectiveness awards. Furthermore, Tutssels’ premium drinks and healthcare clients will be an excellent addition to the group’s roster,” says Sampson.

But, there seems to be confusion over the future role that Tutssels and former rival, but now stablemate, Coley Porter Bell will each play and how the two groups will work alongside each other.

Tutssel is adamant that, contrary to speculation, Tutssels will not be merged with CPB. He says the deal was finalised on that basis. “There is absolutely no way it can happen. We will continue to operate autonomously from our offices in London,” he states.

“We have never pitched against CPB. Our clients have remained loyal to us and will continue to do so. If we needed to, we would pitch against CPB in the future.”

However, CPB sales and marketing director Catrina Henry says there could “very possibly” be a conflict of interests with Tutssels, “although it works in a lot more niche brands than we do.

“It could be quite compatible, given its strengths in the pharmaceuticals industry. There will be no merger at this stage, but we couldn’t rule it out in the future. It would be up to WPP though.”

Sources within WPP are unable to comment on this, but have confirmed that the group is looking to make more acquisitions in the future. This leaves consultancies in the UK and abroad wondering just who will be next to join WPP’s “worldwide network”.

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