Ggt Buys French Ad Agency Bddp

GGT, the advertising and marketing-services group, is set to treble in size following its takeover of French group BDDP for about £105 million. The deal, described by one analyst as the largest of its kind since the beginning of the sector's recovery phase'', pushes the company into the world's top 15 advertising groups based on revenue.

Michael Greenlees, chairman and chief executive, said the enlarged group would be about three times bigger than GGT's current market value of £60 million.

Greenlees said the move had been prompted by accelerating consolidation in the sector and the growing demand from multinational clients for a worldwide service.

GGT, as a small to medium-sized player, needed to make a step change,'' he said.

Analysts shared this view. Lorna Tilbian, at Panmure Gordon, said: This is a great move for them. They were stuck in the middle ground, not small enough to be truly competitive, nor big enough to be a global network.''

Walter Butler, BDDP's largest shareholder and chairman of its supervisory board, said the deal was the best solution'' for France's third-largest agency.

If we had merged into another advertising group,'' he said, we thought we would have lost several clients because of a conflict of interest.''

Part of the deal will be financed by the issue of new GGT shares to BDDP's existing shareholders for about £35 million. They will retain a 24 per cent stake in the enlarged group. The remaining funding will include about £55 million from new shares set to be issued to GGT shareholders on a 1-for-1 basis, and £20 million of new debt.

The French company's consolidated audited revenues were about £142 million last year, more than twice GGT's £62.7 million annual figure.

Greenlees said the deal would be significantly'' earnings enhancing in the first year. The combined group would have net debt of about £45 million, with gearing at about 50 per cent.

Greenlees, described by one analyst as an old-style advertising showman'', said the group was not overstretching its finances.

Analysts agreed that the deal differed from the acquisitions of the 1980s. This was because the price, at about 12 times net earnings, was, not an 80s price'', and because it made greater strategic sense.