For Lowe and SMS: much ado about nothing

Barring a thunderbolt, it seems negotiations between Interpublic Group and WPP Group PLC for the merger of IPG’s The Lowe Group and WPP’s Scali, McCabe, Sloves have faded to black.
Additionally, after months of avoiding pitches against Lowe & Partners/N.Y., SMS/N.Y. managing director Scott Messinger said the agency would like to compete for the Prudential Securities account, which went into review last week–against incumbent Lowe.
Personality clashes, power struggles and some surprises in the due diligence process have all been said to have flatlined the deal. Executives at both holding companies couldn’t be reached for comment.
Eighteen months after the talks began, what has transpired? SMS finds itself bereft of a creative director in New York and on its all-important Mercedes-Benz account. Meanwhile, Lowe & Partners/N.Y. here has revamped its creative department as though no merger were planned. But internationally The Lowe Group hasn’t been able to raise its U.S. profile or gain the bigger international presence it sought via an SMS acquisition. And WPP’s Martin Sortell has yet to divest any businesses, though analysts said he is less pressured to do so now than he was when the talks began.
Last week analysts expressed surprise that the personality issues were as big a deterrent to the talks as they turned out to be. SMS vice chairman Sam Scali’s reported refusal to subordinate himself to Lowe & Partners top three executives in the U.S., combined with his relationship to key SMS clients, soured the deal for Frank Lowe. “Frank Lowe wanted the deal to happen very much, but not if it was going to mean major confrontation in the U.S.,” said an executive with knowledge of the deal.
An issue that was ever present from the time talks between Sloves and Lowe began in early 1992, said SMS insiders, is the separate mindsets of Sloves and Scali. “Marvin (Sloves) wants to begin turning the agency over to younger people,” said one executive close to Sloves. “Sam (Scali) is not that way, he wants to keep managing.”
Scali, interviewed last week, denied that he figured in holding up the deal, and said he was not at odds with Frank Lowe over his future role. “I’ve known Frank Lowe for many years, and I believe Frank, Marvin Sloves and Scott Messinger and I are in agreement with what my role would be should the two agencies merge.”
Copyright Adweek L.P. (1993)

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