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Merger Bells Ring

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Interpublic Group is hoping there is strength in numbers. After months of on-again, off-again talks, Lowe and Bozell are inching closer to a merger, going so far as to brief clients last week on details of the combined entity, sources said.

For nearly a year, IPG brass and the CEOs of Lowe and Bozell have kicked around the idea of bolstering the struggling Lowe office in New York by folding in the clients and revenue of Bozell. Lowe, whose creative heritage remains strong, continues to disappoint IPG with its financial performance. At the same time, Bozell seems to be coming to grips with the notion that, with a single office in the U.S., it's operating at a competitive disadvantage in this age of global consolidations.

"We constantly look for ways to provide better service to our clients," an IPG representative said on Friday. "If combining operations or encouraging our companies to collaborate in new ways offers such benefits, we will always consider it" [Adweek Online, Jan. 31].

Should the deal go through, the 82-year-old Bozell name would remain only on the door of its founding office, the independent Bozell & Jacobs in Omaha. But Bozell CEO Tom Bernardin, 49, is in line to get a top spot at Lowe, and perhaps even run the U.S. headquarters in New York, sources said. Lowe CEO Jerry Judge, the 52-year-old Briton who succeeded Frank Lowe in that position in 2001, would continue to run the $14 billion global network as worldwide CEO.

Sources said Gary Goldsmith would retain his New York chairman title but focus mainly on his duties as chief creative officer. As the top management ranks become crowded, sources said the future roles of U.S. CEO Paul Hammersley and New York president Rob Quish are unclear.

Sources said the structure of the new management team has yet to be finalized. Executives at Lowe and Bozell declined comment.

Talks of a merger heated up again when a significant conflict—Bozell's "Got milk?" client and Lowe's Diet Coke account—disappeared. In December, Coca-Cola said it would move the $40 million U.S. Diet Coke account to IPG sister Foote, Cone & Belding.

Another big obstacle was Bozell's Verizon Wireless, which had reservations about being under the same roof as Verizon Communications. But Lowe's tenure on the latter ended last week. Also last week, it is believed, Verizon Wireless was informed of the merger plans.

Still under discussion is how to finesse the prima facie conflict between Bozell's Bank of America business and Lowe's HSBC account. Sources said a likely resolution would involve moving BofA to unconflicted IPG shops. One option that has been floated is to shift the bulk of the business to Deutsch and a piece to Gotham. Since Bozell's successful defense of the $170 million account last year was led by IPG's chief marketing officer, Bruce Nelson, the thinking is that BofA could move to another IPG shop without much disruption.

For Lowe, a merger would be the latest in a series of attempts to add ballast and leadership to a shop that still shines creatively but has failed to grow, despite gaining global resources through its 1999 merger with Ammirati Puris Lintas. There were bright spots in 2002, including the $60-80 million global Ricoh win and the addition of U.S. duties on HSBC. And last month, a multi-office effort led to the $75 million global Electrolux win.

Still, in the past 14 months, the shop has lost two high-profile brands: Diet Coke and Heineken (the latter followed former Lowe creative chief Lee Garfinkel to D'Arcy Masius Benton & Bowles). In addition, Judge, a personable leader who cut his teeth overseas, has had little impact in the U.S.

As for Bozell, which has $880 million in billings, the merger would culminate a shrink cycle that began in 1999, when then-parent True North Communications stripped it of its overseas offices and annexed them to FCB. At one time, Bozell had 90 offices around the world, including 10 in the U.S.

Bernardin, an outdoorsman who is seen as pleasant and politically astute, entered the Bozell fold in 1993. He was president and head of the Jeep-Eagle team at Campbell Mithun Esty in Southfield, Mich., when that office was folded into Bozell's Detroit operation, which handled Chrysler-Plymouth. In 1997, Bernardin headed east to become general manager at Bozell in New York. Within a year, he was president.

On his watch, Bozell achieved modest new-business gains, but creative profile has improved considerably. A key figure in that turnaround, executive creative director Tony Granger, was recruited by Bernardin. (Granger is now moving to London to succeed David Droga as ecd of Publicis Groupe's Saatchi & Saatchi.) Last year Bozell claimed five Lions at Cannes, including golds in press and poster.