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Kovel Kresser Sees New Opportunities Emerge

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Merger In Japan Gives Venice Shop A New Investor, Myriad Options
LOS ANGELES--The fallout from one of the biggest agency mergers in Japan in recent years is reaching the West Coast, where one Los Angeles-area shop is bracing for possible changes.
Kovel Kresser & Partners, Venice, Calif., is considering its options with Tokyo's Asatsu, which now has a majority stake in the agency. Asatsu, the third-largest agency in Japan, announced a plan several weeks ago to merge with Japan's seventh-largest agency, Dai Ichi Kikaku (DIK) in Tokyo, which owns a 60 percent share in Kovel Kresser. With that ownership stake now controlled by the deep-pocketed Asatsu (and, by extension, WPP Group in London, which subsequently purchased a 20 percent ownership stake in Asatsu), a number of scenarios are emerging for Kovel Kresser, said sources.
Those possibilities range from a cash infusion by Asatsu that would support an acquisition spree by the $60 million shop to a buyback by the agency's current management. Kovel Kresser's two principals, chief creative officer Lee Kovel and chief executive Yushi Ebihara, own a 40 percent stake in the agency.
"I think this is a good opportunity for us," said Ebihara, who added that the shop will continue to operate independently under Asatsu. "We will be in a much stronger position than we were before."
Opening new offices in markets such as San Francisco or New York is a possibility, said Ebihara. "We have to discuss this with the new ownership," he said. The agency once operated an eight-person service office in Oakland, Calif., but closed it several years ago.
Another possibility, said sources, is expansion through acquisition, likely in Southern California. Kovel Kresser is looking to beef up its capabilities in the design, direct response and interactive areas, said sources.
Other scenarios involve a change in the ownership lineup, including a buyback of Asatsu's stake by current management, a sale of part or all of that stake to an outside party or a full takeover of the agency by Asatsu. It is believed Kovel Kresser's current management team would have input on decisions to sell the shop.