Global advertising company WPP, has won European approval for its $1.5 billion purchase of New York based Grey Global Group, despite industry worries how the merger may affect the market for media buying.
The European Commission has today given WPP the go ahead for the acquisition of Grey, clearing the way for Grey shareholders to vote on the sale. The fear was that the combined forces of Grey and WPP, could demand cheaper rates for airtime on TV or for space in newspapers and magazines, thus reducing competition.
However, the commission concluded that there are enough large advertising firms within the industry and media owners are powerful enough to ensure that the market remains competitive.
The acquisition by WPP will create an advertising and public relations group with revenues of around £4.8 billion, putting it on a par with Omnicom, which had net sales of £4.78 billion last year (see WPP Wins Battle For Grey With £845 Million Bid).
The purchase of Grey Global also brings with it the account of world’s largest advertiser Procter & Gamble, as well as drinks group Diageo and the pharmaceuticals giant GlaxoSmithKline. Grey had been the only major advertising agency not to be owned by another group.
Grey will lift WPP’s revenues by around 20%, WPP said last September, and combined revenue for 2004 would have reached £4.9 billion ($9.2 billion).
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