Brunswick on two sides once again

Brunswick has been the largest financial PR firm for many years and has a lucrative way of leveraging its market power by working on both sides of a deal at the same time.

The Grupo Santander bid for Abbey National Plc is just the latest in which Brunswick is PR adviser to both sides.

A few months ago, a similar thing happened when Celltech, a long-time Brunswick client, got a bid from Belgian firm UCB. The Belgians asked who was good, Celltech recommended Brunswick and it got the deal.

It happens quite a lot, apparently. Glaxo and SmithKline Beecham was another.

But surely it is a dangerous game. The Brunswick line is that the Abbey and Santander teams are separate so there is no conflict of interest. Lawyers or investment banks could make the same argument when they find themselves working for both bidder and target – as happened with the Philip Green and Marks & Spencer affair. Lawyers and investment banks aren’t allowed to though, so why should PR agencies get away with it?

The answer lies in the quality of the relationship. The lawyer or the investment bank is much deeper into an organisation than the PR firm. It is also likely to be involved in negotiation where detailed knowledge of the other side would give one party considerable advantage. That is not what the PR firm does. In a contested battle, it rubbishes the opposition, but in a supposedly friendly transaction it is all about making sure both sides sing from the same hymn sheet.

The risk is of another offer. If the Abbey bid turns into an auction, Brunswick may have to resign Santander – although it and all the other advisers would likely make far more money working for one in a battle than they possibly could working for two on an agreed deal.

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