Media is key to BBH-Burnetts deal

For nine months, ’G2’ was the codename used by the handful of

players involved in the secret deal that satisfies Bartle Bogle

Hegarty’s global media ambitions while retaining its fiercely guarded

independence. But can this be the same BBH that has eschewed any

thoughts of establishing an advertising network? Here, Campaign answers

the questions raised by the deal that marries two of the strongest

privately owned advertising brands in the world.

Is this the first step to Leo Burnett securing majority ownership of

BBH?

No. Neither side wants this to happen. It involves a contractual

minority stake in perpetuity. The deal is structured to allow Burnetts,

over time, to acquire up to a ceiling of 49 per cent in BBH

Communications, the holding company that owns all, or the majority, of

all parts of the BBH Group.

How much has Burnetts paid?

As both companies are private, they are not making this information

public.

Also, neither side has revealed the multiple on which the deal is based,

which makes taking a stab at the figure impossible. What is known is

that this is a cash deal, based on a multiple that would leave other

recent acquisitions (TBWA-Simons Palmer, GGT-BST, and HHCL-Chime-WPP) in

the shade. pounds 20 million? pounds 25 million? Your guess is as good

as Campaign’s.

How many BBH staff will benefit financially as a result of the sale?

And, as a once-only deal, isn’t there a danger of dis-incentivising

existing and potential staff at BBH?

BBH says it has nearly 40 shareholders: all will benefit, as will chosen

long-serving employees who are not shareholders. Also, BBH’s remaining

majority shareholding is to be revalued to allow shares to be

redistributed in the future.

Will the three founders remain at BBH?

Yes, none has any plans to leave and they are on five-year

contracts.

Who approached whom?

BBH approached Burnetts in 1994 when it started working on the question

of global media delivery. At the time Burnetts was not interested; it

reopened talks with BBH about nine months ago.

As a premium brand with strong creative credentials, BBH has been

courted by many potential suitors - Interpublic’s Phil Geier and WPP’s

Martin Sorrell, among others. Why Burnetts?

Some potential suitors wanted to take complete control of BBH and, while

discussions did take place with others, the chemistry was not right.

In this case, both sides want BBH to remain a stand-alone brand with

majority control, a factor that was crucial for BBH’s founders.

BBH is currently pitching for the Levi’s business in the US. Was this a

factor in the timing of the deal?

Apparently not, given that BBH has known about the Levi’s pitch for a

matter of weeks and its discussions with Burnetts pre-date that.

Have there been any links between the two companies until now?

Only in people terms. Michael Conrad, Burnetts’ worldwide creative

director, was a founding partner of TBWA Germany, which opened its doors

a year before John Bartle, Nigel Bogle and John Hegarty became the three

co-founders of TBWA London in 1973.

Also, Bogle began his advertising career at Burnetts and worked closely

with Jeff Fergus on the Cadbury’s business for five years. Fergus is now

the president of the European and Asia Pacific division of Burnetts,

and, together with Burnetts’ chief administrative officer, Roger Haupt,

was one of the key architects of the deal.

How will the two agencies operate?

Motive will set up in the Asia Pacific region in 1998, alongside BBH’s

office in Singapore. Plans are under way to set up Motive in the US too.

Globally, Motive will be responsible for strategic planning on all its

business, using the Burnetts network for buying on a market-by-market

basis. Creatively, the two shops will remain independent. There will be

no swapping of board members or staff.

What about Motive and Burnetts media in the UK?

This is still under discussion. The options are to merge Motive into

Burnetts, Burnetts into Motive or to keep the two brands separate. It

seems unlikely, however, that the two will remain separate.

Burnetts is a Procter & Gamble roster agency and BBH works with

Unilever.

What about conflict?

Neither side envisages any problems because the deal keeps creative

origination of work at both agencies separate. Unilever and P&G handle

their own media buying and BBH is not a Unilever club agency, while

Burnetts is a P&G roster agency of many years standing.

In the past, BBH has been critical of agency networks. Has anything

changed?

It’s true that BBH has said sniffy things about advertising networks,

but it has never aspired to be a network. While it intends to stick to

its centralised creative production ethos, it is now acknowledging that,

to be a genuinely global player, it must be able to offer decentralised

media delivery, which Burnetts will provide.

So how does Burnetts benefit by having BBH as a partner?

Financially, of course, by handling media for BBH’s global clients.

Also - arm’s-length deal or not - Burnetts will certainly acquire some

additional creative lustre as a result of investing in one of the

strongest brand names in global advertising.

What is Burnetts asking of BBH under the terms of the deal?

Nothing at all, according to BBH, over and above meeting BBH’s stated

five-year objectives, which are unchanged as a result of the sale to

Burnetts.

This article was first published on Campaign