Three colours Grey

13 September 2004 By Fiona Maharg-Bravo

The deal just about washes its face financially for WPP, and will add big clients to the UK adfirm s stellar roster. Havas shareholders should be relieved. The French advertising firm may now find itself on the receiving end of a bid.

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WPP has agreed to pay $1.3bn (£727m) for Grey Global, beating rival bidders Hellmann & Friedman and advertising group Havas. The acquisition values Grey at $1,005 a share, or $1.5bn. Grey has net cash of $172m.

The UKbased advertising firm plans to pay half the consideration with cash, and the other with shares, representing approximately 6.5% of the enlarged issue share capital of WPP. WPP said it aims to raise Grey's operating margin from 5.8% in 2003 to at least 10.5% by 2005, and is targeting $20m of cost savings in 2005.

WPP was advised by Merrill Lynch and Morgan Stanley. Grey was advised by JP Morgan and Goldman Sachs.

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