Analysis: Mergers & Acquisitions - Weber Shandwick is the new bully in town - Now the biggest kid on the block, Weber Shandwick is set to become the biggest bully as well. Adam Leyland assesses the challenges ahead

There's a new bully in the pulpit. Its name is Weber Shandwick, set to become the largest PR agency in the world following the stunning merger of the two firms last week by new CEO and chief minister Larry Weber.

There's a new bully in the pulpit. Its name is Weber Shandwick, set to become the largest PR agency in the world following the stunning merger of the two firms last week by new CEO and chief minister Larry Weber.

There's a new bully in the pulpit. Its name is Weber Shandwick, set to become the largest PR agency in the world following the stunning merger of the two firms last week by new CEO and chief minister Larry Weber.

The new firm will have combined revenues of dollars 320 million, 2,500 employees and 68 offices across the globe. That makes it comfortably larger than its nearest global rival, Burson-Marsteller, which had 1999 revenues of dollars 275 million. It's also, on paper at least, the No. 1 agency in the US, with dollars 210 million in fee income versus the dollars 181 million of its nearest US rival, Fleishman-Hillard. But the St. Louis-based agency has made a number of notable hi-tech acquisitions since the start of the year, and may retain its pole position in 2000. Weber Shandwick will definitely be the No. 1 tech agency, however, with dollars 120 million in revenues following the merger, versus the dollars 100 million tech practice built up by Fleishman-Hillard over the past two years.

Weber believes that being No. 1 is a vital move in order to move the industry forward on his own terms. 'I'm interested in setting the agenda for the next five years, in a non-arrogant way. A successful merger is about stamping one's mark on an industry, and if you're No. 2, or No.

10, you can't do that.'

Of course, Weber acknowledges the importance of 'quality of product, being the best at what we do.' But if there's one thing his vision is not about, it's creating a global 'culture' and a global brand. Weber envisions what he calls 'hyperpractices,' lead practice areas in which critical mass allows the division to have incredibly detailed expertise on any given specialty.

'It's not about one culture, one blended identity. 'All for one, one for all' is completely old-fashioned. The new economy wants highly specialized practices. It's no longer enough to be healthcare experts; we have to be experts in oncology. It's no longer enough to be technology experts; we have to be experts in the semi-conductor business.'

The second component of his vision is the use of technology itself to speed the communications process. 'We have all kinds of technologies that are designed to make the grunt work of PR easier, to eliminate boring, repetitive tasks that can be automated.' Weber says that 50% of his current clients already use Weber's desktop operating system, Weber Works, an intranet/extranet tool that was developed by the Boston-based agency.

And he is also looking at other tech partnerships to help the customer, such as e-mail analysis (with Echomail), and sales automation (with Firepond and Calico).

Industry reaction

Not surprisingly, industry reaction to the merger has focused mainly on the merits of being the No. 1 agency. 'Comparing themselves to Burson may not be apples to apples, since most of Burson's growth has been organic,' said one industry observer. 'And WPP could do the same thing if they decided to lump Cohn & Wolfe in with Burson.'

One element of intrigue has been the diminished role of senior Shandwick executives, with Shandwick CEO Scott Meyer now chairman of a team that involves three Weber executives: Weber as CEO; Marijean Lauzier as president and COO; and Bill Davies as CFO. Meyer says he is 'thrilled' by his new role. 'My passion has always been focused on strategy, development of the products, services, programs. I get to be doing what I want to do.

I design the roadmap, Marijean drives the bus.'

'This is all about a team,' stresses Weber. 'Scott is a great strategist, visionary - I respect him as a thinker, intellectual. Marijean is also a great strategist, and a terrific operator, working well with clients, plus measurement and profitability.'

One insider at Shandwick was among the many to comment archly, however, about the choice of name, and the order in which the two entities appear.

'The deal itself makes sense, but the branding doesn't make sense. Weber was essentially a group of disparate tech businesses, and had plenty of issues to manage as management earnouts came to an end. So the idea that it appears, let alone takes the lead, in the name, is somewhat galling.'

Meyer is again conciliatory. 'There was a good deal of discussion over the name, but I'm more concerned with how you raise the child than what you name it.'

Key clients of both Weber and Shandwick did not want to comment on the deal. But one senior Shandwick executive believes the significance of its No. 1 position is more important to Wall Street than clients. 'Clients don't give a damn about that macho stuff. They want quality.'

Wall Street is perhaps more important to the deal than is at first apparent.

In merging three PR brands into two - Weber Shandwick and Golin/Harris, each allied to one of parent company Interpublic's two major advertising operations (McCann and Lintas respectively) - industry speculators believe that it frees the way for IPG to pursue another advertising acquisition, with True North, Incepta and Grey among the suspected candidates.

Holes in the plan

However the deal plays out on Wall Street, the merged entity still has some obvious flaws. Weber has identified five key hyperpractices on which to focus: hi-tech, public affairs, healthcare, financial/investor relations and entertainment/

lifestyle (incidentally, the same five identified by Meyer as part of his 1,000-day plan to make Shandwick the No. 1 agency on its own). But while the deal creates leadership in hi-tech, now worth dollars 120 million (and Shandwick already had leadership in public affairs with The Cassidy Companies and in entertainment/lifestyle with Rogers & Cowan), it adds nothing to weak healthcare and financial investor relations propositions. In addition, while the agency will be based in New York, it still won't have a strong presence in the Big Apple.

Meyer says the newly merged business will 'help us to make acquisitions in terms of credibility. Potential suitors will value the fact that we are committed to being No. 1 in each category.'

Overlapping businesses will be an issue to resolve, notably in Boston, Silicon Valley, London and Hong Kong. One Silicon Valley insider says 'it will be interesting to see whether they really have enough business to keep everyone on board - I doubt it.' Weber says he has no plans to consolidate tech-specific brands such as Miller Shandwick, Shandwick Technologies and Weber.

Meyer says overlapping business locations must be dealt with case by case. 'For example, in London we are all moving to a new location. It's also driven by leasehold obligations.' The headquarters will be in Shandwick's new offices in New York.

The reorganization will also pose some client conflicts. For example, HP is a Shandwick client and Lexmark is with Weber. 'These issues will be resolved over the next 100 days to the satisfaction of our clients, along with other details,' promises Weber.

Integration teams are being set up by Meyer and Lauzier across all locations, practice areas and also to deal with other aspects of running the business: business planning and strategy, client development and client service, agency marketing and business development, HR, IT, finance and operations, and knowledge management.

Weber, ever the big picture guy, is remarkably blase about the logistics of the merger. 'I'm not concerned with the very mundane task of merging offices,' he says. 'I'm more concerned with recruiting the best, keeping the best and having the best service.' He is right to be concerned there: executive recruiters are already searching for talent amidst the uncertainty.

Meyer is confident the integration will work however: 'When these people are brought together, when they see the work, the clients we're winning, setting a new agenda, they'll spend less time analyzing who won and who lost.' And step up to that pulpit.

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