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FOR-SALE SIGNS: All or Part of Chiat/Day Network Could Be Up for Grabs By Alison Fahey and Michael McCarth

Jay Chiat has been putting out feelers in the ad communities on both sides of the Atlantic in an attempt t

On the heels of much speculation that Chiat’s London office has had lengthy merger talks with several British shops including Howell Henry Chaldecott Lury, sources now believe that Chiat’s U.S. operation is also ripe for a sale.
‘We understand that (Chiat is) an agency for sale,’ said one top-ranking source at a global agency. In the U.S., sources are quick to single out Omnicom Group, the far-flung holding company that’s parent to three worldwide agency networks – DDB Needham, BBDO and TBWA – as a possible buyer.
In fact, Jay Chiat, chairman and ceo of Chiat/Day, has had at least one informal discussion with Omnicom ceo Bruce Crawford which one source characterized as ‘exploratory.’
‘Omnicom has conversations with people all the time, but they are more along the lines of ‘What if . . . ‘ than anything definite,’ said Crawford when asked if Omnicom has talked with Chiat. ‘There are no acquisitions imminent. Nor are there negotiations going on right now to purchase Chiat/Day.’
Jay Chiat was traveling and could not be reached for comment. Bob Kuperman, president and ceo of Chiat’s Los Angeles office, said ‘there is no truth’ to the Omnicom/Chiat rumor.
However, sources close to both companies are convinced that both Omnicom and Chiat will eventually try to hammer out a deal. ‘I fully expect it to happen,’ said one former Chiat/Day executive.
Crawford stressed that any further Omnicom acquisitions would have to make a strategic fit with one of the three existing networks. Omnicom is not interested in acquiring a fourth, free-standing, agency network. ‘You have to make it work for clients and for the people involved and the cultures have to be compatible, or it isn’t worth pursuing,’ said Crawford.
Observers believe that philosophy wouldn’t necessarily derail an Omnicom/Chiat deal. In fact, many executives close to both companies believe Chiat and TBWA could be merged together fairly easily. ‘It’s a perfect strategic fit,’ said one executive.
TBWA and Chiat are both creatively-driven shops and geographically, the agencies could complement each other nicely. For example, TBWA has expressed a desire to have a California presence and could leverage Chiat’s reputation on the West Coast. In turn, Chiat, which sold its share in Australian-based Mojo in November and has a shaky London operation, could be bouyed by TBWA’s strong international network.
There are really no client conflicts to speak of. In fact, one client, Nissan, could be precisely what’s drawing Chiat and TBWA together. Chiat handles Nissan in the U.S. and TBWA handles the car maker in Europe.
Dick Costello, TBWA’s president and coo said TBWA and Chiat often talk about Nissan business and that ‘we’re great admirers of their work,’ but he added that there are no discussions underway.
Rumors linking Chiat/Day to a sale have escalated as its balance sheet has worsened. Client defections and and an ill-timed international expansion plan has left Chiat about $30 million in debt.
Besides finances, associates of Jay Chiat’s say the executive is motivated to sell the agency because he’s looking ‘for an exit plan.’
However logical the deal sounds, one source warned that the reassignments that would be required of key players may keep the companies apart. ‘The human element is usually what (messes) these things up,’ he said.
Copyright Adweek L.P. (1993)