Is Arun Nanda buying WPP stake in Rediffusion?

22 May,2018

 

By A Correspondent

 

Is Diwan Arun Nanda buying WPP’s 26.7 per cent stake in Rediffusion Y&R? According to (reasonably reliable) sources, advanced levels discussions are on for the buyback of the Y&R and Dentsu stakes in Rediffusion Y&R. Together, the two global majors own 40 per cent of the 45-year-old Rediffusion Y&R. Or what’s officially called Rediffusion Dentsu Young & Rubicam Private Limited.

 

It may be remembered that until recently it was WPP that was keen on buying out the 60% owned by Nanda and Ajit Balakrishnan. But that was the WPP run by Sir Martin Sorrell. Now Nanda is reportedly keen on buying the WPP stake. And not just that, the Dentsu stake too.

 

Not many think it’s a wise move as this will allow Y&R to enter the country on its own and pose fresh competition in what is clearly a tough market for creative advertising agencies.

 

While Rediffusion recently bagged the prestigious State Bank of India mandate, the creative advertising business overall has been under a cloud over the last year-and-a-half. Even some of the bigger named agencies, including those from the WPP group, have been facing a squeeze on earnings.

 

According to our sources, post the buyback of the shares, a merger of Rediffusion, the agency, and Rediff.com, the general interest internet-based portal, is also being mulled.

 

While our sources do not reveal the deal size, and whether it’s in line with the estimates of a Rs 100 cr valuation for the 60 per cent stake owned by Arun Nanda and Ajit Balakrishnan of a few years back, given the changed business scenario, the 40 per cent equity could well be valued at a low Rs 20 crore.

 

Part of the current Rediffusion Y&R fold is the Made-in-1946 agency Everest Brand Solutions, Rediffusion-Wunderman, Sudler& Hennessey and the PR wing.

 

As per the Rediffusion Y&R website, the story goes that “one evening in 1973, three leading stalwarts of advertising came together to discuss the state of creativity in advertising. They wanted to do something about the mediocrity, the contentment with the status quo, the inertia that seemed to pervade agencies and people. The three people, Diwan Arun Nanda, Ajit Balakrishnan and Mohammed Khan, came up with a gameplan – to start their own advertising agency, Rediffusion. An agency that would be passionate and bold; an agency that would take ownership of clients and their work to new heights; an agency that would create fearless, category-busting work.

 

That was a different era. Forty-five years ago. The rules of the game have changed dramatically. The dramatis personae of the advertising business have changed. Will it be achche din yet again for the two Big As of the Media business – Arun and Ajit. Time will tell.

 

 

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