Lowe, Bozell Working To Make Pieces Fit

Titles, responsibilities and reporting lines—not conflicts, strategy or client resistance—have been the biggest sticking points in the anticipated merger of Lowe and Bozell, sources said last week.

There are surprisingly few potential client conflicts between the two Interpublic Group agencies, and the big one—Bozell’s Bank of America and Lowe’s HSBC—already appears to be worked out. Sources said HSBC will stay put at Lowe, while an arrangement reached on Friday calls for the majority of the $170 million BofA account to go to Deutsch, with Gotham picking up $20 million in assignments.

The strategy behind the merger is clear: Lowe needs a rainmaker to deliver the kind of revenue growth IPG expects from it; Bozell, down to just its New York office, no longer has the strength and size to compete in an increasingly global marketplace [Adweek, Feb. 3].

The biggest hurdle to a merger has been the question of who will lead the U.S. operation. Paul Hammersley, Lowe’s U.S. CEO for nearly two years, is expected to retain that title, but he is likely to have company. Alongside him will be Tom Bernardin, currently president and CEO of Bozell. Bernardin will carry two titles, president and COO, said sources.

Bernardin would pick up the president’s title from Rob Quish, who may take on a new global role. Worldwide CEO Jerry Judge and chairman, chief creative officer Gary Goldsmith would retain their duties, sources said.

Judge would not discuss management roles last week. Speaking broadly of the merger, he said, “We’re progressing. We’re closer now to what we call the Bozell maneuver.”

He added: “Bozell is spiritually and culturally very close to Lowe in terms of its ambition to give its clients a higher return on their investment. And that means doing advertising which is truly visible and memorable. There’s a great cultural fit.”

Although Bozell is the much smaller shop, Bernardin would bring with him the $500 million Verizon Wireless business, which would instantly become a top client at Lowe. He also is seen as a strong leader, having helped IPG prevail in last year’s long-shot BofA defense. Though he is unassuming in public, colleagues describe Bernardin as a take-charge manager who is not afraid to tackle tough decisions.

Earlier last week, Bernardin wrote in a memo to staffers: “Steps have been taken to bring about a Bozell/Lowe merger. This idea has been discussed in the past and set aside for various reasons. Now, it seems a very likely and desirable change for all of us.”

So, for the sixth time in nine years, it appears Lowe will be recast at the top. Some wonder why so many chiefs are needed in New York, which would have combined billings of about $2 billion and a staff of about 800 after the merger. The reporting lines also are peculiar, with Bernardin, Hammersley, Goldsmith and Quish all expected to report to Judge.

That setup was reached through a compromise after Hammersley cried foul at the prospect of answering to Bernardin, said sources. In fact, one plan originally OKed by IPG was to install Bernardin as CEO, said sources.

That plan is said to have been hatched among IPG, Judge and Bernardin, who felt he needed the top post to be effective. But sources said Judge did not communicate the details to his lieutenants and in fact assured them their posts were secure. Judge declined comment.

Still, the current plan may change, since it must ultimately be approved by IPG CEO John Dooner. “It’s far from ironed out,” said one executive. Dooner, through a representative, declined comment.