MINNEAPOLIS - Fallon McElligott's buyback from WPP Group PLC is moving closer to fruition.
FM chairman and co-founder Pat Fallon last week said he has set a 'game plan' for the reacquisition of the agency which would free it from the WPP-owned Scali, McCabe, Sloves/N.Y. network. SMS bought a stake in FM in 1986. A month ago, Fallon conceded he would like to buy back the agency, but called negotiations 'nascent' and said financial discussions had not taken place. The game plan appears to have moved forward since then.
Agency sources speculated last week the buyback could be completed as soon as two weeks from now, but Fallon denied a deal could happen that fast.
'I don't think it's possible to have it completed in two weeks,' he said. 'These things are a lot more complicated than that. I think it could take quite a bit longer than that.'
One local industry executive characterized agency management as 'working like crazy to finalize the buyback so they can get back to what they do best . . . advertising.'
Fallon would not discuss a possible purchase price, but financial analysts valued an agency like FM with annual billings of $175 million at upwards of $10 million.
Pat Fallon opened Fallon McElligott Rice in August 1981 with partners Tom McElligott (currently out of the advertising business) and Nancy Rice (now group creative director for DDB Needham Chicago). The agency initially said it had no interest in acquiring or in being acquired, but in February, 1986, WPP unit Scali, McCabe, Sloves/N.Y. purchased a 75% stake when FM was billing about $80 million. SMS now owns an 80% stake in the agency.
Despite industry speculation at the time that the shop would lose some of its creative luster, FM has weathered the loss of two of its principals, as well as numerous account and staff changes, to maintain an enviable creative reputation and grow to a $175 million shop.
Also in protracted negotiations is Interpublic Group's interest in buying SMS from parent WPP Group. Sources said FM's apparent haste in finalizing its own buyback is unrelated to any WPP-IPG deal regarding SMS.
Copyright Adweek L.P. (1993)