Desire to Compete Against the Big Three Leads Havas to Snyder
BOSTON–Its sale to Havas Advertising will make Arnold Communications, New England’s largest advertising agency, the lead shop in a second network being built by the French conglomerate.
A desire to compete against the biggest global players in the industry–dominated by The Interpublic Group, Omnicom and WPP–led Paris-based Havas to pay what some consider top dollar for the assets of Snyder Communications, which owns Arnold.
The pure stock deal, valued at $2.1 billion, is expected to close in the next two months and will result in Havas paying Snyder investors the equivalent of $29.50 a share. (At the market close last Thursday, Snyder was trading at around $23.) Havas will then begin trading on U.S. markets. Worldwide revenues of $2.2 billion would secure Havas’ place as the fourth-largest agency holding company.
“We do not view this transaction as buying Snyder, but instead as acquiring four exceptional companies with expertise and capabilities complementary to our own,” said Havas Advertising chairman and CEO Alain de Pouzilhac in a telephone interview last Tuesday, two days after the agreement was reached with Snyder.
In addition to Arnold, Havas agreed to buy Brann Worldwide, Bounty SCA and Circle.com. Once the deal closes, both Brann and Circle.com will operate as a unit of Havas Diversified Agencies Group in Paris, while Bounty becomes a unit of Havas’ other agency network, Euro RSCG Worldwide in New York.
Completion of the deal will put Snyder chairman and CEO Daniel Snyder out of the ad game he entered a little more than three years ago when he bought Barry Blau & Partners (now part of Brann) and then Arnold. Shortly after the deal to buy Arnold closed, Snyder’s high-flying share price of $54 began to sink and by last fall, following a costly and complex restructuring, it hovered at around $9. By December, reportedly spurred by an offer from an outside bidder, Snyder retained an investment bank to explore sale options.
To compete in the same league as IPG, Omnicom and WPP requires a second agency network and a strong U.S. presence, de Pouzilhac said. That’s the role that Havas now expects Arnold to play. At least six agencies in Europe–including WCRS in London, La Banda in Spain, and Rempen & Partner in Germany–will report to Havas through Arnold chairman and CEO Ed Eskandarian.
The 62-year-old ad man has agreed to stay on board for another three years and was the only executive to be appointed to the board of Havas. The arrangement with Havas will help Eskandarian achieve goals originally set when Snyder bought the agency: provide currency to fuel global expansion and allow Eskandarian to retire by age 65. “This deal almost instantaneously gives us a worldwide network. … It also offers the opportunity lost with Snyder when its currency was devalued to buy assets, incentivize our people and recruit new talent,” Eskandarian said.
As for the criticism that Havas may have paid too high a price, Eskandarian offered this assessment. “Years ago, I paid 50 percent more than I probably should have for a piece of land that was abutting my own on Cape Cod. … To me–and probably only to me–it was worth the price.”
Eskandarian admitted Arnold’s sale to the French had “a feeling of dƒjˆ vu,” a reference to the deal he cut 11 years ago to sell HBM/Creamer to London-based WCRS [Adweek, Feb. 14], which ultimately led him to walk away and buy Arnold. Even so, he said, “had it been left up to me, Havas would have been my choice. I think they’re terrific. … They needed a second network … and there are very few agencies to buy in the U.S.”
With Fallon McElligott being snapped up by Publicis SA just weeks ago, only two large purely independents remain: Deutsch in New York and Doner in Southfield, Mich.
Most Arnold employees got news of the deal while celebrating the President’s Day holiday last Monday. Others received an e-mail greeting from Eskandarian when they arrived at work Tuesday morning. Among those who were at home was Arnold chief creative officer Ron Lawner. By midweek, however, he was somewhat dismissive of the specter of new owners. “As long as we can continue to do what we do, I’m happy.” K