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Hakuhodo takes stake in Mustoe Merriman Levy

LONDON - Hakuhodo, Japan's second-largest advertising agency, is taking a stake in London-based Mustoe Merriman Levy, following the news that it will form a holding company with two other Japanese agencies.

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Hakuhodo will buy a 49% stake in Mustoe Merriman Levy and will fold its Hakuhodo UK subsidiary into the agency.

Hakuhodo already has a 50% stake in the Tunbridge Wells-based agency Nexus/H, which handles Suzuki's UK advertising as well as Asahi Beer and All Nippon Airways.

The deal, however, creates a client conflict between Hakuhodo UK, which handles advertising for the electronics giant Hitachi, and Mustoe Merriman Levy's work for rival Korean firm LG Electronics.

Nick Mustoe, CEO of Mustoe Merriman Levy, said that most of the agency's work for the £1.6m LG Electronics account was in the white goods area, and hopefully would not conflict with Hitachi, which is home enterainment equipment. "We are meeting next week to discuss it with LG Electronics. However, Hitachi is the priority."

Hitachi is a worldwide client for Hakuhodo, and it is part of the agreement that Mustoe Merriman takes on the account.

Mustoe added: "Our collaboration with Hakuhodo will enable us to preserve who we are, while at the same time giving us worldwide coverage -- something that is good for us and our clients, particularly as Hakuhodo are known as a creative powerhouse."

Ryoichi Katsui, managing director of Hakuhodo London, will become a director of Mustoe Merriman, which had billings of £65m last year.

Mustoe said that the way agency was run would not change after it became part of Hakuhodo. "We have always enjoyed running the agency our way and that will remain the same. We will continue working with the same people and handle the same clients within the same culture."

Mustoe will retain a 22% stake in the agency, with the rest of the management team owning the remaining 29%.

On December 2, Hakuhodo announced that, along with the smaller Japanese ad agencies Daiko Advertising and Yomiko Advertising, it would form a holding company that would have billings of around Y1,000bn (£5.2bn).

The deal will see the three agencies operating under one umbrella and the formation of a fourth agency, which will handle media buying and other media transactions. It will be the second-largest Japanese advertising group after Dentsu, which dominates the Asian advertising scene. The new holding company is likely to be listed at the earliest possible opportunity, the agencies said.

Tomokazu Jimbo, corporate executive officer of Hakuhodo, said: "Our equity share with Mustoe Merriman Levy in the UK is one of our most important moves into the European market.

"Mustoe Merriman Levy will be the key London agency for Hakuhodo and will be another huge point of leverage to provide our clients, who carry out business in Europe, with a unique synergy of two cultures. British clients will also have access to our extensive network around the world especially in the Asia-Pacific region. We are very excited about this new relationship."

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