As WPP Group revealed details of its winning acquisition bid for Grey Global Group last week, at least one aspect of that explanation raised more questions than the London holding company answered.
Steve Blamer, Grey Worldwide's North America president and CEO—and heir apparent to the company's longtime CEO, Ed Meyer—wasn't even mentioned as WPP said Meyer's successor will most likely be named by mid-2005, six months after the expected closing by year's end of WPP's acquisition of Grey.
When asked about the time line to name a worldwide CEO of Grey and whom he would support, Meyer said only that "[Blamer's] a remarkable man. A first-class decision maker. But let's not go there right now. One day I might get around to thinking about it."
In 2003, Blamer was promoted from president of Grey New York after being wooed by Interpublic Group's Foote Cone & Belding to helm its office here. But in June, while at the Cannes ad festival, Blamer, 48, whom sources said wasn't told Meyer was putting Grey on the block, is said to have been blindsided by press leaks as he introduced his newly picked agency partner, CCO Tim Mellors.
Blamer, a 15-year Grey veteran, is said to have favored a deal with San Francisco private-equity firm Hellman & Friedman, which lost out in the bidding, as did French holding company Havas. He was not available for comment.
Sources said that while IPG has never lost interest in Blamer, it's unlikely he would leave Grey before the WPP transaction closes, lest he loses out on any proceeds from the sale.
Besides Blamer, other internal contenders include Carolyn Carter, who runs Europe, the Middle East and Africa, and Joe Celia, worldwide CEO of G2 and president of Grey Synchronized Partners, which includes Grey Interactive and Grey Direct. Carter and Celia did not return calls.
Meyer's new boss, WPP CEO Martin Sorrell, made it clear in a Sept. 13 conference call with investors that WPP will lose little time in taking control of a company that—while publicly traded—has been perceived as the private purview of Meyer. Sorrell promised quick improvement in Grey's margins, which were 5.8 percent in 2003. WPP, which has already identified savings of $20 million, has set a margin target of 10.5 percent for Grey in 2005.
During the call, WPP said it could reduce Grey's tax rate to an estimated 38 percent in 2005, compared with 53 percent paid in 2003. Back-office operational redundancies should also help cut costs, as well as the expected attrition of Grey Global Group officers like vice chairman Bob Berenson, 64; CCO Steve Novick, 64; and Grey CFO Steve Felsher, 55. A Grey rep declined comment on their behalf.
The deal jettisons WPP into the industry's No. 1 spot, with combined 2003 WPP and Grey revenue totaling $8.629 billion, slightly more than Omnicom's $8.621 billion. Sorrell underscored opportunities for revenue growth, citing Grey's ad unit—which brings WPP new clients like Procter & Gamble—and its units in public relations, healthcare, direct, Internet/interactive and media management. With the addition of Grey's MediaCom unit, WPP, already with MindShare, Mediaedge:cia and Maxus, will now have the world's largest media-services operation, with combined revenue of $1.2 billion, according to WPP.
Meyer and Sorrell said Grey's key clients gave their blessings to the transaction, which brings together rivals such as P&G, Unilever and Colgate under the WPP umbrella.
WPP's $1,005-a-share equity-and-cash offer for Grey was approved in the early evening of Sept. 11, after an all-day Grey board meeting here. Meyer, 77, signed a new, two-year contract with WPP as chairman and CEO and will remain in the same posts at Grey Worldwide until the new CEO is named. At that point, he'll take a seat on WPP's board.