Business-to-Business, Research, PR Talents Are Keys to Purchase
DALLAS–Bates USA, New York, will acquire Houston-based Churchill Group and fold the public relations, research and trade advertising specialist into its Bates Southwest operations in Houston.
Terms of the deal were undisclosed. Nearly 40 Church-ill employees will join 45 at Bates to staff an agency that claims approximately $100 million in combined billings.
The key attraction for Bates in the deal, according to Houston chairman Jerry Kerr, is the diversification Churchill brings to his office’s capabilities.
“One of the issues with the ad industry in Houston is that some agencies have become vulnerable by putting all their eggs in one basket, like we had with Texaco,” said Kerr. “This [acquisition] expands the breadth of what we’re able to do now . . . and allows us to get into the area of business-to-business advertising with some added credibility.”
Each of Churchill’s three existing divisions will continue to operate as separate units at Bates Southwest offices, but under the names Bates Churchill Public Relations, Bates Churchill Advertising and Bates Churchill Research. Eight Churchill principals will retain duties on existing accounts.
Those three units will report to Mirrel Kephart, who shifts from chairman and chief executive officer at Churchill to Bates’ vice chairman under Kerr. The Churchill units are expected to expand services to other Bates offices nationwide, according to Kerr.
Kephart, who plans to retire in the next few years, said he initiated talks with Bates and other undisclosed suitors in April.
The public relations and research business for the 25-year-old Churchill amounted to $5 million in fee income in 1997. The operation was augmented by the addition of a business-to-business advertising unit a year ago. Billings for that group grew to $16 million with clients like Dresser Industries and Equilon Enterprises.
Since losing its $40-45 million Texaco account last August, Bates had rebuilt its billings to approximately $80 million with added work from GTE Wireless and new accounts like Equistar Chemicals.
The Bates-Churchill deal is ex-pected to close in the next few months, perhaps as early as August, according to sources.
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