Grey Global Group shareholders on Thursday approved the company's sale to WPP Group, clearing the way for the consummation of the deal on March 7.
Grey shareholders will get $1.7 billion in cash and WPP stock, with a nearly $500 million prize going to Grey's chairman Ed Meyer.
The sale marks the end of independence for Madison Avenue's last big independent, Grey Global.
WPP Group's acquisition of rival agency network Grey Global Group is going to have no impact on Grey's Indian operations, assures Nirvik Singh, chairman, South Asia, Grey Global Group.
WPP will operate Grey as a separate network, in the same manner as WPP's existing networks - O&M Worldwide, JWT and Y&R - function at present.
As far as India is concerned, Singh, who oversees Indian operations as a part of South Asia, will continue to report directly to Edward Meyer, Grey's chairman, and not the WPP India chairman.
Grey's shareholders ought to be happy with this deal. When Grey Advertising went public back in 1965, the stock was valued at $9.75. Then, in September 2004, Meyer struck a deal to sell Grey to WPP for a cash-cum-stock package initially worth $1,005 per share.
But WPP's shares kept rolling, hitting a 52-week high of $58.94, before pulling back to $58.50 on March 2. Based on WPP's March 2 price, each Grey share is worth $1,138.57. That's more than a hundredfold gain since Grey went public.
Despite the size of the deal and WPP Group chief executive Martin Sorrell turning to a still bigger player, WPP is still the No. 2 agency network in the world. WPP, with about $7.9 billion in revenues last year, after gobbling up Grey (estimated revenue of $1.47 billion in 2004) create a nearly $9.4 billion conglomerate, according to industry analysts. That leaves WPP trailing Omnicom Group, which had a revenue of $9.7 billion in 2004.
Meyer, now 77, signed a contract with WPP to keep his job through December 31, 2006. He'll get an annual salary of $1 million; annual performance bonus of $750,000 to $1 million; WPP "performance shares" with a target value of $1 million; and $2 million in stock options.
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