The Financial Times reported on Friday that Finsbury Glover Hering (FGH) has been holding talks to buy Sard Verbinnen. PRWeek understands the deal is being billed by both parties as a merger rather than an acquisition.
Under the plan, WPP would own just over 50 per cent of the new company, as it currently does with FGH. US private equity firm Golden Gate Capital, which has a 40 per cent stake in Sard Verbinnen, would retain around five per cent, with the remaining 45 per cent held by existing and future partners of the firm.
The new business would employ about 1,000 people across 25 offices and generate about $350m in annual revenue. That would put it 10th in the PRWeek Agency Business Report rankings of the biggest comms agencies in the world for the 2020 calendar year, ahead of Golin, ICF Next and FTI Consulting.
Sard Verbinnen, which has a global workforce of about 200, topped the Mergermarket table for the number of M&A deals handled globally in 2020, and was second in the table by value of the deals. As a combined entity, FGH was third by deal count and fourth by deal value.
PRWeek understands that FGH is not primarily attracted to Sard Verbinnen for scale, but rather sees the benefit of adding the agency's expertise in M&A and crisis work, in particular. Sard Verbinnen, which has its headquarters in New York, also has little significant geographical overlap with FGH. Outside the US, the former operates only small offices in London and Hong Kong.
The FT cites two people close to the talks who said negotiations have been complicated by a number of factors, including structuring the deal. However, PRWeek understands that there is confidence that a deal will be reached imminently, with the hope that the merger could be completed in early 2022.
The FT reports that the combined business was likely to pursue an initial public offering in 2023. However, this is unlikely to be a priority at the early stage of the merger.
FGH itself launched as a combined entity at the start of this year following the formal merger of WPP stablemates Finsbury, The Glover Park Group and Hering Schuppener. In the process the management team – including Finsbury founder Roland Rudd, GPG founder Carter Eskew and Hering Schuppener managing partner Alexander Geiser – up its stake to 49.99 per cent. Rudd and Eskew became co-chairs, with Geiser made chief executive.
Under plans being discussed for the new entity, Sard Verbinnen co-founder George Sard will join Rudd and Eskew as a co-chair, while fellow co-founder Paul Verbinnen will become co-chief executive, North America.
Golden Gate Capital's investment in Sard Verbinnen in 2016 reportedly valued the agency at $150m. The FT says plans to embark on global expansion have "stumbled", however. In September last year, Sard Verbinnen announced it had acquired UK-based Oakhill Communications, taking the agency's UK workforce to 25 at that point.
FGH's move for Sard Verbinnen would be the latest in a series of significant transactions involving global corporate and financial comms agencies.
In the summer, Brunswick agreed to sell a 10.7 per cent stake to US merchant bank BDT Capital Partners, valuing the business at about £500m. Teneo secured new backing from CVC Capital Partners in 2019.
Other notable transactions have included LDC, the private equity arm of Lloyds Banking Group, becoming the new majority owner of Instictif and later taking a minority stake in Headland. Another private equity company, CD&R, snapped up Grayling and Citigate owner Huntsworth in 2020.
FGH declined to comment. Sard Verbinnen did not respond at the time of publication.