By Judy Warner and David Gianatasio
BOSTON--Arnold Communications has signed a letter of intent to be bought by Cyrk, the publicly traded sales promotion company headquartered in Gloucester, Mass., sources said last week.
Although denied by the chief executive officers at both companies, agency and industry sources identified Cyrk as the nonadvertising company that has agreed to buy the $650 million ad agency (Adweek, May 12).
Barring any unforeseen stumbling blocks, these sources said, a deal uniting the two companies could be finalized within weeks.
Sixty-year-old Arnold chairman Ed Eskandarian has been candid about his desire to retire before turning 65 and cash out of the ad agency that in eight years he has built into the nation's 21st largest. Arnold, whose clients include McDonald's, Volkswagen of America, Fleet Financial Group and Nynex, reported revenues of $75 million in 1996.
A buyout of the Boston agency by Cyrk would almost guarantee Eskandarian's continued involvement for the next three to five years and fulfill his aspirations to be part of an integrated marketing company and among the top 20 largest agencies in the country, sources said.
The deal also would help Cyrk diversify outside the promotional products and services industry, where it has grown steadily over the last 20 years. A year-long expansion drive has seen Cyrk buy or merge with at least four competing sales promotions firms. In May, it agreed to a merger with Simons Marketing in Los Angeles, creating a global promotional company with annual revenues of $700 million.
Arnold is well known to both Cyrk and Simons because of work for such common clients as McDonald's and Volkswagen. Simons is a major vendor to McDonald's, having created several promotions for the fast-food chain. Cyrk played a role in the agency's pitch to Volkswagen, creating a customer loyalty program that featured VW-branded clothes, caps and key chains.
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