But the arrival of Ayer's new financial partners may not turn out to be bad news for the agency since Siano himself is one of the four players in the Humphreys partnership. With Siano part of the investor group, the issue of who ultimately will control the agency remains murky. According to Siano and Humphreys, Ayer's present management will remain in control and continue to run the day-to-day operations of the company as an independent, privately-run agency.
Last week, Siano issued a memo confirming that Ayer was looking to Humphreys for an infusion of capital but challenging ADWEEK's version in the March 22 issue. "Neither Mr. Humphreys nor the partnership will own Ayer outright," Siano said.
Sources involved in the deal, however, confirm that Humprheys and his four-person investment consortium--which includes W.Y. Choi, a media mogul with substantial interests in the Asia-Pacific region--bought a stake estimated at between 50% and 80%. Eventually, the group could take over full ownership of the $1.5-billion agency.
In an interview Friday, Siano said the deal which has been in the works for two months and which derailed the Ketchum-Ayer merger talks of several months ago-leaves Ayer as a debt-free, highly capitalized operation which is poised for expansion.
"We were just about debt-free but not well-capitalized--we used all our dollars to pay off the bank," said Siano. "Now we are well-capitalized."
With its new supply of cash, Ayer is expected to pursue acquisitions in several areas. Sources said Ayer is currently in talks with an unidentified agency in Canada to return to that country after selling its Canadian-based McKim Advertising in January 1992. Ayer Europe, which is 30% owned by Ayer, also inked a deal last week to acquire London's Leagas Shafron Davis Chick.
With Humphreys and Choi involved, sotaces expect Ayer to pursue much bigger targets in the U.S., Europe and the Far East. One of the first moves may be to buy back the 70% stake that Ayer sold in Ayer Europe last year to a group led by Ayer Europe head Dick Hedger. Ayer is also expected to use Choi's contacts to pursue acquisitions in the Far East and to use Siano's U.S. expertise to beef up its below-the-line operations in North America.
Talking about possible deals, Humphreys said, "We will be interested in quality, not quantity." The ex-Saatchi official characterized the agreement as a "smart deal" for Ayer. "This enables Ayer to move forward and grow without compromising itself," he said. "They don't have to jump into a pit of snakes."
As the asking price for ad agencies continues to fall, both Siano and Humphreys said the cash infusion will enable Ayer to take advantage of a buyer's market. "There's a much greater opportunity for us than in the last few years--the 1980's were ridiculous in this business," said Siano.
Siano said the deal had its beginnings two months ago when Humphreys invited him to lunch in London. Sources said that Humphreys has been involved in similar talks in the recent past; roughly two years ago he reportedly planned on investing in Saatchi & Saatchi Co. PLC using money from a Korean investor. As a result of the new partnership, Humphreys will join Ayer's executive committee, representing Choi and the other investor. The committee will be expanded from six to 10 people with Ayer executives Keith Gould, Janet Keeler and Anne MacDonald also joining the existing six: Siano, Pat Cunningham, Glenn Corlett, Tom Maxey, Dom Rossi and David Gantman.
Copyright Adweek L.P. (1993)