Hike in profits makes Grey sale more attractive
NEW YORK - Grey Global Group's sale plans could be given a boost by news that its profits doubled over the past quarter to $10.8m on the back of a strong performance in Europe.
Revenue for the second quarter of the year was up by 13.8% to $364m. Pre-tax profits at Grey's European operations more than doubled despite a $4.6m loss at the company's Scandinavian operations. Revenue from Europe was up by 17.8%, bolstered by the weak dollar. Revenue at the US operations rose by 8.4% for the quarter.
The company revealed in July that it had appointed investment bank advisers Goldman Sachs and JP Morgan Chase & Co to look at a potential sale.
WPP Group and Havas have both said they are interested in acquiring the company, which owns the advertising agency Grey Worldwide, media agency MediaCom and the PR networks APCO and GCI Group.
In addition to the two ad networks, private equity firms Hellman & Friedman and Kohlberg Kravis Roberts have also taken an interest.
Sir Martin Sorrell, the WPP chief executive, has already told reporters that the company's major clients have given the OK to the sale. The news that Grey has increased profitability would make it even more attractive.
Grey could be sold for as much as $1.8bn. Ed Meyer, the chairman and chief executive of Grey since 1970, stands to receive a $38m payout, a pension, a car and driver and a staffed office if he loses his job following the sale.
Grey said of its results: "The company's growth in revenue and profitability continued in the second quarter with improved performances in all regions. Most notably, pre-tax profit more than doubled in Europe despite the losses in Scandinavia."
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