Freud and MWW buy back independence while holding companies up M&A plans
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Freud and MWW buy back independence while holding companies up M&A plans

Two major PR agencies have bought themselves out of holding company ownership, even as a flurry of deals signal that acquisition is set to rise to pre-recession levels in 2011.

Holmes Report

By Arun Sudhaman

LONDON: Two major PR agencies have bought themselves out of holding company ownership, even as a flurry of deals signal that acquisition is set to rise to pre-recession levels in 2011.

The UK’s Freud Communications is understood to have repurchased the 50.1 per stake in the company that has been owned by Publicis Groupe since 2005, according to a report in the Sunday Times. Meanwhile, US agency MWW has bought itself back from Interpublic Group after a decade of ownership.

MWW reported revenues of almost $39 million in 2009, according to the Holmes Report 2010 Global Rankings. In the same report, Freud’s 2009 revenues exceeded £22 million. The Economist analyses Freud’s reasons for buying back the shares here.

The Freud/Publicis split will surprise few observers of the PR industry – this post explains why. Next week, meanwhile, the Holmes Report will carry an interview with MWW founder and CEO Michael Kempner, explaining his reasons for the buyout.

Ironically, the deals come as acquisition activity continues to heat up. This week alone, WPP has announced its purchase of Blue State Digital. Meanwhile both Ketchum and Racepoint Group have upped their investment into Asia; Ketchum taking a majority stake in its Ketchum Newscan Greater China operation, and Racepoint acquiring PPR Asia.

It is unlikely the deals will stop there. Ketchum is understood to be close to agency purchases in India and Singapore, while a number of firms – including Edelman, MSLGroup, Hill & Knowlton, GolinHarris and Grayling – are  understood to be actively seeking acquisitions across the world.

Rick Gould, managing partner at agency M&A specialists StevensGouldPincus, told the Holmes Report last year that the agency M&A market was poised for a major rebound. His prediction appears to be coming true, with the second half of 2010 punctuated by a number of deals. MSLGroup, Edelman, MDC Partners, Hill & Knowlton and Next Fifteen have all made significant purchases in recent months, across both mature and emerging PR markets and disciplines.

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