Publicis in Lead for Frankel Deal

Purchase of $85 Mil., Family-Operated Shop Seen for January
CHICAGO–Publicis S.A. remains in discussions to buy Frankel & Co., after apparently outbidding at least one other holding company for the marketing-services firm, sources said.
No deal is expected before the end of the year, although sources close to the negotiations indicated that a sale could be finalized as soon as mid-January.
Frankel in September enlisted Goldman, Sachs & Co. to set up a sale or merger. Several holding companies, including Omnicom Group and WPP Group, listened to presentations from the agency, said sources. At least one other bid, in addition to that from Paris-based Publicis, was received and rejected, sources said.
Frankel officials declined comment. Publicis worldwide chairman and chief executive officer Maurice Levy confirmed his company was among those considering Frankel for its portfolio, but declined to elaborate or confirm that a bid had been made.
Frankel claimed $85 million in revenue for its last fiscal year ending Jan. 31, with clients including Visa, McDonald’s and Frito-Lay. The primary owner of the closely held company is the 70-year-old chairman, Bud Frankel. Frankel’s son, Peter, is vice chairman of the company.
Publicis already has a strong presence in Chicago, with ownership of Publicis & Hal Riney
and a 49 percent stake in the African-American target agency Burrell Communications.
Adding a marketing-services company like Frankel, which specializes in promotions and direct work, would patch a hole in Publicis’ U.S. holdings. Levy has been open about his desire to strengthen the network in the U.S. It was not clear what client conflicts would be posed by acquiring Frankel under a Publicis holding company. Publicis & Hal Riney in Chicago, for example, handles Subway restaurants, while Frankel’s clients include McDonald’s.
Two years ago, Frankel considered going public but scrapped those plans, citing changed market conditions.