- Andrew McMains

NEW YORK Interpublic Group is in advanced talks to merge Deutsch and Lowe, sources said. The agencies and IPG declined to comment, but sources said the talks have heated up in recent weeks and a decision could be coming soon.

Such a combination would give Deutsch global reach and amplify Lowe's offering in the U.S. Sources cautioned, however, that past talks had failed to produce a merger and obstacles remain before the two agencies can come together.

Globally, Lowe has some 70 offices -- including affiliates -- and revenue of about $400 million. Deutsch's two domestic offices, in New York and Marina del Rey, Calif., generate revenue of about $200 million, according to sources.

The possible merger comes after the shops have discussed working together on Deutsch client Kodak and have partnered on a global new business pitch for Novartis. Lowe may help Deutsch distribute ads for Kodak printers overseas, and last month the shops collaborated on a pitch for global creative duties on Novartis' Prevacid, according to sources. The pitch was unsuccessful, but sources described the experience in positive terms.

The shops also share a major client in Johnson & Johnson, with Deutsch handling U.S. creative duties on Tylenol and Lowe working on the company's line of baby products, among other brands.

Client conflicts appear to be few. Deutsch's Tylenol business overlaps with Lowe's Zicam account in the area of cold and flu medicine. Last year, Tylenol spent more than $160 million in major measured media, compared to nearly $25 million for Zicam, according to Nielsen.

Also, Lowe's Milk Processor Education Program/Milk Dairy Management Inc. account may bump up against Deutsch/LA's Dr Pepper and Snapple business. Media spending for Dr Pepper, Diet Dr Pepper and Snapple totaled about $80 million last year versus more than $45 million for Milk PEP/Milk DMI, per Nielsen and TNS Media Intelligence, respectively.

Lowe is no stranger to mergers, having combined with Bozell (2003), Ammirati Puris Lintas (1999) and Scali, McCabe, Sloves (1993). In contrast, Deutsch has worn its independence on its sleeve, even after IPG acquired the shop for an estimated $250-300 million in 2000.