Fahlgren, HMS Get It Together

HMS Partners and Fahlgren circled each other for years before finally agreeing on a proposed merger last week, executives said.

“We’ve had a number of conversations,” over six or seven years, said Steve Drongowski, CEO of Fahlgren. But it wasn’t until the middle of last year that talks between the two Columbus, Ohio-based companies got serious, Drongowski and his HMS counterpart, Rick Milenthal, said.

The executives confirmed that a letter of intent to merge Fahlgren with HMS’s advertising arm, HMS/Hallmark, has been signed, making a completed deal possible within 90 days. The combined shop would claim revenue of approximately $40 million. The deal between the privately held shops would be in stock.

While sources said Fahlgren’s loss of the Owens-Corning and Premier Cruise Line accounts spurred the talks, both CEOs said the deal was in the making before those losses occurred and downplayed their effect on the negotiations.

“This is something we’re doing for a lot of reasons bigger than one particular client,” Drongowski said.

The agencies have no major client conflicts and a number of areas where they mesh. Together, they have nine Midwest and Southeast offices, including three in Florida and one in Atlanta.

HMS Partners is the holding company for HMS/Hallmark, interactive shop Motivo and public relations arm HMS Success.

Fahlgren is not strong in either PR or interactive, Drongowski acknowledged. “What they have added over the years are things we have not added,” he said.

Fahlgren’s lead clients include several McDonald’s co-ops, NAPA and several entertainment clients including DreamWorks and Paramount. HMS’s accounts include Anthem Blue Cross and Blue Shield, Hoover, and Adelphia Communi cations.

“We feel the merger is a giant step in reaching a national platform,” Milenthal said. “Our clients expect us to be competitive on a national basis.”

The name of the combined agency, which is expected to be headed by HMS/Hallmark CEO Bill Binstock, has not been decided.