Parent’s Internet Focus, Loss of AT&T Change Relationship
CHICAGO–The president of YAR Communications said last week he may consider buying the company back from The Leap Group after his largest account was folded into the sale of Leap’s ethnic subsidiary to Young & Rubicam.
Leap’s pending sale of its One World Communications unit to Y&R includes Asian American agency Kang & Lee and YAR’s AT&T business, but not YAR Communications itself, which Leap keeps. The sale price was estimated by sources at between $10 million and $15 million [Adweek, July 27].
“The new management of Leap takes a different approach [to the business],” said Yuri Radzievsky, YAR’s president and chief executive officer, who was left out of the sale negotiations with Y&R. “We’re looking at it as a business decision on the side of Leap. They own us.”
Fred Smith, who took over as Leap’s chief executive officer in March, said the sale to Y&R is part of his plan to increase the company’s concentration on its Internet arm, Quantum Leap.
Tom Sharbaugh, president of The Leap Partnership unit, said the company has talked to Radzievsky about selling back YAR and that doing so would be possible “if it makes sense for shareholders.”
“This is a conversation that’s been going on,” Sharbaugh said. “It ties back to what [Fred Smith] says in that we’re interested in directing our resources elsewhere.”
Sources said Y&R initially wanted YAR to be part of the acquisition, but with AT&T cutting its ad budget, the agency lost its appeal. Leap then folded YAR’s AT&T business into the deal, sources said. Kang & Lee and Y&R also work with AT&T.
Leap Group representative Beth Pastor declined to comment on specifics of the deal, including YAR’s AT&T business.
Leap purchased YAR, which specializes in European and Asian target marketing, in April 1997 for $23.4 million; it acquired Kang & Lee last November for $1.4 million. The acquisitions were made by former Leap CEO Rick Lutterbach, who has since left the company. The agencies were grouped informally as One World Communications.
The sale would cut substantially into Leap Group revenues. In its annual report for the fiscal year ending Jan. 31, Leap reported that YAR and Kang & Lee’s AT&T business alone represented 36 percent of Leap Group’s total revenues.
…..–with Andrew McMains
Get Adweek's Brand Marketing Daily Newsletter in your Inbox
Today's highs and lows of creativity