NEW YORK—Grey Global Group, parent of Grey Advertising as well as international public relations firms GCI Group and APCO Worldwide, has retained investment banks Goldman Sachs and JP Morgan to consult on a possible sale of the company.
The sale of Grey is not expected to influence the anticipated acquisition of APCO by its employees. That deal—Grey announced its plans to sell APCO earlier this year—is expected to be concluded in a matter of weeks.
Grey’s stock hit its highest price per share this week, trading on the NASDAQ exchange at $850 a share on June 24, before the announcement. It rose $45 to close the week at $895.
The company is the world’s seventh largest advertising agency, with a current market value of $1.2 billion. The majority of its voting stock is still controlled by the company’s 77-year-old chairman and chief executive Ed Meyer, who also owns about 25 percent of the stock.
The company declined to comment on a possible sale, as did GCI chief executive Robert Feldman. However, speculation within the advertising industry was that Publicis could emerge as the most likely bidder for Grey—both agencies work extensively for Procter & Gamble—although WPP and Japanese holding company Dentsu are rumored to have indicated their interest. Another possibility is that a private equity firm might take an stake in the company.
“This came out of the blue,” Tim Fidler, director of research at Ariel Capital Management, told The New York Times. Ariel Capital owns 395,000 shares of Grey, about one-third of the company’s stock. Fidler said Ariel was strictly a passive investor and had not agitated for a sale. But, he added, “we’re excited about it and think it’s good news.”
Grey clients include Procter & Gamble, Mars/Masterfoods, Diageo and GlaxoSmithKline. Its top 10 clients have been with the company for an average of 23 years.
An acquisition would raise interesting questions about the future of GCI, which has an extensive global network but lacks the critical mass of larger competitors. If Publicis buys Grey, GCI would find itself a sister company of Manning Selvage & Lee; if WPP prevails, GCI would be one of several major PR brands, alongside Burson-Marsteller, Hill & Knowlton, Ogilvy Public Relations Worldwide and Cohn & Wolfe.