Mumbai: With the successful completion of buyback deal involving Redifussion, WPP’s Young & Rubicam and Dentsu, Advertising agency Rediffusion is set to go solo with aggressive plans to increase its clientele and expanding into Digital space with the backing of Rediff.com.
The 40% stake held jointly by Young & Rubicam (26.67%), part of WPP, and Japanese ad giant Dentsu (13.33%) have been bought back by its founders Diwan Arun Nanda, Chairman of the agency and Ajit Balakrishnan, CEO, Rediff.com. Post the deal; Nanda and Balakrishnan have complete control over Rediffusion and its second agency Everest.
It paves the way for the emergence of one of India’s largest independent agencies. It is also the oldest independent agency in the country, having begun in 1973.
WPP will now have the scope to develop Y&R as a wholly-owned agency in India, a market where it had no presence. In addition, its brands Wunderman and Sudler, both of which were in JVs with Rediffusion in direct marketing and healthcare advertising, respectively, will be developed as wholly-owned agencies by the group.
Lack of considerable contribution from Dentsu nor Y&R could be one among the reason for failure of JV, as Arun Nanda states that they been trying to extricate themselves for quite a while and In the last decade, neither Dentsu nor Y&R have contributed anything to the agency’s revenues.
The unexpected and sudden departure of WPP CEO Sir Martin Sorrell has also paved way for the dissolution of the 24-year long partnership, as Nanda himself admitted that the absence of Martin made it very easy. Speaking about the DYR partnership, he says, “The only place of joint interest post Sorrell remained India; we were eager buyers and they were happy to be willing sellers.
Martin Sorrell had unsuccessfully tried to get a controlling stake in Rediffusion Y&R in 2007 and 2008. He ran out of patience in 2010 that resulted in exodus of Rediffusion client Colgate Palmolive to Bates 141 and its crown jewel Airtel moving to another WPP group agency JWT India. Industry observed the development as pressure tactics on the owners of Rediffusion to sell their stakes to WPP.
Rediffusion is now on an acquisition spree for new business. Recently the agency has won State Bank of India, the Tata Trusts and Liebherr, a German white goods firm and it also has great expansion in the digital space, powered by the expertise of Rediff.com.
Without revealing the buyback price Nanda stated that it was a very reasonable amount.
