Plunging shares affect acquisitions

by John Tylee, Campaign 25-Jan-08

Acquisition activity by some of the world's major marketing groups could grind to a halt amid fears that this week's stock market turmoil heralds a global recession.

Industry onlookers say buying sprees are likely to stop as groups'
plunging share prices mean they will be unable to find sufficient
funding. Also, owners of takeover targets are likely be nervous of any

offer involving payment in shares.

In the meantime, agency networks are bracing themselves for significant
drops in adspend as consumer confidence threatens to collapse.

Maurice Levy, the chairman of Publicis Groupe, warned: "Our clients are
looking at their stock price and know they have to be cautious."

This week, share prices in the media sector mirrored the volatility of
the market. WPP's stock price slipped by 26.5p before rallying at 587p.
M&C Saatchi shares fell to 107.5p from 140p in mid-November.

"What's happening is bound to limit what we do in terms of expansion,"
David Kershaw, the M&C Saatchi chief executive, explained.

Bob Willott, the editor of Marketing Services Financial Intelligence,
said the smaller marketing services companies were likely to suffer more
as fund managers switched to what they considered less risky
investments.