WPP Group today confirmed it reached an agreement yesterday to acquire Young & Rubicam for $4.7 billion in stock, creating the world’s largest advertising company with expected combined annual revenues of $6.7 billion.
The deal, which had been in negotiations for months, will result in a two-thirds split of the combined company's stock to WPP shareholders, with the remainder going to the holders of the acquired company.
Tom Bell, Young & Rubicam’s CEO, will become chairman of the merged company's Young & Rubicam unit; although, some reports said Bell will step down after the merger is completed.
Former Young & Rubicam chief financial officer Mike Dolan will be CEO of the unit.
The merger negotiations heated up over the past two weeks and broke down several times. WPP's French rival, Publicis, reportedly also made an offer yesterday to acquire the New York-based company, but its relationship with Renault proved a conflict with Young & Rubicam’s contract with Ford.
According to WPP CEO Martin Sorrell, the acquisition was spurred by the burgeoning Internet market, and the British advertising giant expects the merger to strengthen its online advertising and Web development business.