WPP on the verge of buying Australia's George Patterson in £38m deal
LONDON - The WPP Group, which today revealed a 32% rise in first-half profits to £254.8m, is on the verge of taking control of one of Australia's most famous ad agencies, George Patterson Partners in a A$90m (£38m) deal.
The proposed takeover has been cleared by the Australian Competition and Consumer Commission, and will see WPP buy The Communications Group, which will be merged with its Young & Rubicam operation in Australia. TCG owns George Patterson Partners, along with media agency Zenith Media, Professional Public Relations and Underline:Fitch.
Reports in the Australian media say that the chairman of TCG, Alex Hamill, has gone on holiday to Fiji, leading to speculation that the transaction is all but a done deal. TCG and George Patterson are headed up by chief executive Ian Smith.
The Sydney Morning Herald reported this morning that the final stages of due diligence were still to be completed and that there could still be problems -- particularly as TCG has revealed it posted a loss last year of A$3.6m. The Times reports that Sir Martin Sorrell, chief executive of WPP, is now haggling over the price because of this.
WPP already owns 30% of the company, acquired when it bought Cordiant in 2003, while the private equity group Pacific Equity Partners owns 55%. It was reported that Pacific Equity Partners was holding out for a sum of A$150m, with hopes of starting a bidding war that would also include Omnicom and Havas. However, this never materialised.
George Patterson Partners, founded in 1934, was previously known as George Patterson Bates, but changed its name in November 2003 after a management buyout, following WPP's acquisition of Cordiant. The management retains a 15% stake in TCG.
The agency counts among its clients the Australian telecoms giant Telstra, which reportedly has a clause saying it can switch agencies if George Patterson is sold to new owners. It also works on Kettle crisps, Arnotts Biscuits, which makes Tim Tams, and it worked on marketing for the 2003 Rugby World Cup.
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