They used to say you never got fired for buying IBM and you’re on pretty safe ground when you write that WPP is thinking of gatecrashing a big agency acquisition.
Campaign thinks so anyway, reporting that WPP mergers head Andrew Scott is hammering his calculator to see if WPP can justify outbidding Japanese giant Dentsu for digital agency AKQA. It will need to be a very flexi calculator as Dentsu is reportedly prepared to pay up to $600m for a business with revenues of around $165m.
There comes a point in all these deals when machismo takes over from financial logic and WPP boss Sir Martin Sorrell has previous in this regard. He paid £400m for Chris Ingram’s Tempus network back in 2001 which looked decidedly toppy although that deal has been vindicated as Tempus’ Italian Mediaedge network has morphed into a global player.
Just before the credit crunch WPP bid £1.1bn for established research firm TNS to pluck it from the jaws of its preferred fate, a merger with German research giant GfK. The jury’s still out on that one.
Back in the 1990s WPP overbid for David Ogilvy’s Ogilvy & Mather and had to go cap in hand to its banks as a previous recession hit.
WPP is clearly keen to show the world that it plans to be the leader in digital, as in much else, as it has temporarily lost ground to rival Publicis Groupe following the French group’s well-judged capture of Razorfish from Microsoft for what now looks like a very reasonable $530m.
Is AKQA worth even more? Probably not but its owner, General Atlantic, won’t be complaining although its management and staff possibly will.