MSGI Adds Online Marketing Leverage, Acquires Grizzard

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Marketing Services Group Inc., New York, signed a binding agreement worth $100 million yesterday to acquire Grizzard Communications Group, Atlanta. MSGI's revenues are now expected to exceed $200 million, putting them closer to their goal of becoming a $250 million company by the end of the year.


The transaction is structured as half equity-half cash and is set to close within 90 days.


MSGI chairman/CEO Jeremy Barbera said the acquisition, its third in the last six months, is "completely" complementary for all parties involved in that almost none of its services and clients overlap with Grizzard's. The two share only one client but provide totally different services for it.


"This is a perfect hand and glove fit," Barbera said. "They do a lot of what we don't do and we do a lot of what they don't do, there is no redundancy between the clients and services. The merger into one enterprise is going to make it a very powerful full-service integrated marketing company."


"We chose MSGI because the fit between the two and the chemistry between the management teams of both," said Mike Dzvonik, chairman/CEO of Grizzard.


According to MSGI, the acquisition will complement its core database marketing services and add leverage to its online marketing capabilities.


"Our objective is to bring more Internet practices to all of their clients," Barbera said. "And over the next six months we are going to be focusing heavily on Internet transactions."


Dzvonik said the acquisition is now going to give Grizzard's clients access to products and services that it would have otherwise had to look for externally.


"We now get the benefit of their Web, products, services and expertise," he said. "With the importance of the Web growing we see a definite need for us to drive our clients in that direction, and this puts us ahead of the game in trying to do that."


Both will now have total access to each others products and services. Dzvonik said MSGI also offers products that Grizzard was looking to develop itself but no longer has to.


The two will work aggressively to integrate and adopt their services into one another, Barbera said. Grizzard will now become a wholly owned subsidiary of MSGI with all of its "management people remaining intact," he said.


Grizzard, which generated $65 million in 1998 and $14.5 million in adjusted EBITDA, is ranked as the sixth largest direct response agency in the country in reported capitalized billings by the Direct Marketing Association. Its services include strategic planning, creative, database management, print-production, mailing and Internet marketing.


Barbera said he wanted to have MSGI become a $200 million company, and that it will continue to look for the right opportunity to make it a $250 million company by year's end.


"There are still five months left in the year," he said. "We are still looking for opportunities. Last winter we were a $70 million company and we have nearly tripled that already."


Back in January MSGI acquired list firm Stevens-Knox, New York, and in March it acquired marketing services subsidiary CMG Direct, Andover, MA.


"The Stevens-Knox acquisition had a list focus while CMG Direct had a Web focus," Barbera said. "This time the focus was on an agency. I think we have now become one of the more dominant businesses in the sector."
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