Advertising major Saatchi coming to India

Wednesday, 30 June 2004, 07:00 Hrs
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LONDON: Advertising major Saatchi has announced plans to open an office in India as part its expansion plans.

David Kershaw, a founding director and chief executive-designate of the agency, said the company's roll-out in Asia would be in the near future, with offices planned in China, South Korea, Indonesia, Thailand and India.

It will subsequently have outlets in France, Germany, Italy and Spain by autumn 2006. The firm would look to Eastern Europe and Russia once those expansions were completed.

Charles and Lord (Maurice) Saatchi co-founded M & C Saatchi in 1995 after shareholders forced them out of Saatchi & Saatchi, their original company and the agency behind the "Labour isn't working" campaign for the Conservative party in 1979.

With the old agency now part of the huge media and communications group WPP, the successor enterprise announced plans to put the Saatchi brand back on the stock market.

The agency plans to raise 10 million pounds from the Alternative Investment Market towards the end of July, valuing the company at 70-75 million pounds.

The five founding directors, including the Saatchi brothers, own now about 80 percent of the firm and aim to sell 40 percent of that holding by floatation in the market, raising 4.4 million pounds each.

Following the floatation in the market, the directors will control just over half of the equity and their stakes will be subject to a two-year lock-in clause.

The brothers earned millions from Saatchi & Saatchi but have scaled down their involvement in the industry. Charles, who stopped taking an active role in 1997, is better known as the UK's leading modern art collector.

Maurice works for the firm part-time and is co-chairman of the Conservative party, which was propelled to power in 1979 on the back of his company's campaign.

David Kershaw, a founding director and chief executive-designate of the agency, said M & C Saatchi's business model "could not be more contrasting" with that of its predecessor.

Saatchi & Saatchi become the world's largest advertising agency in the mid-80s but hit difficulties in the early 90s media recession. Maurice quit following a dispute with shareholders in 1995.

The agency was renamed Cordiant and sold to Publicis four years ago in a 1.3 billion pound deal. Cordiant was rescued by Sir Martin Sorrell's WPP last year after a series of high-profile client losses.

"Saatchi & Saatchi, which set the pattern for those that followed us, was absolutely built on an acquisition model... Every single business we have started has been a start-up. It is just a very different culture of company," Kershaw said.

The company, which has minimal debt, will use the proceeds to expand in Europe and Asia. Mindful of mistakes made in the past, M & C Saatchi's business model eschews big-money deals.

Reports say that it poaches executives from the big advertising groups to set up international offices, which are 80 percent-owned by the founding directors with the other 20 percent controlled by staff.

"Rather than buying brands and goodwill we have found people within the conglomerates, we have given them equity and allowed them to be part of the brand," said Kershaw.

Source: IANS
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