BCom3 (US)

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BCom3 was the holding company created at the end of 1999 from the merger of agency networks Leo Burnett and D'Arcy, with partial funding from Japanese advertising giant Dentsu. At the time, the new group looked like an end in itself. But in fact it was just a temporary rest-stop. Just over a year later, the group announced a $3bn takeover by French-owned Publicis. Like BCom3, the new arrangement also had the blessing (and backing) of Dentsu, and elevated the enlarged Publicis into the top four marketing groups worldwide. 

The driving force behind BCom3 was always Leo Burnett. In 1998, that agency began to feel the cold chill of isolation at its neck as one of the last remaining major marketing groups in private ownership. Burnett CEO Richard Fizdale opened tentative negotiations with rival group MacManus, the parent of DMB&B, to discuss pooling their respective media arms, Starcom and MediaVest, into a joint venture to better serve shared client Procter & Gamble. At the time, MediaVest was responsible for buying all TV space for P&G, while Starcom handled print media. One thing led to another and by October the two groups were beginning to talk about a full merger instead. But just a few weeks later the deal collapsed, apparently after disagreements over how to combine the two companies' respective US subsidiaries. Instead, Burnett said it had entered talks to negotiate an alliance with the Japanese giant Dentsu. But these discussions also appeared to have stalled by mid-1999...

In September of 1999, Fizdale overhauled Burnett's corporate structure, creating a holding company, Leo Group, to manage the three main businesses of the Leo Burnett Worldwide advertising agency, media network Starcom and the group's 49% shareholding in UK agency Bartle Bogle Hegarty, as well as Burnett's other marketing services subsidiaries. At the same time Fizdale took on the role of group chairman, appointing Roger Haupt, formerly COO, as chief executive. A month later, Haupt announced that some form of larger deal was "imminent", but no one quite expected November's bombshell. MacManus had also moved on from its earlier talks with Burnett and was now widely understood to be finalising a deal with Interpublic. But behind the scenes, potential conflicts had developed between key D'Arcy client Mars and its arch-rival Nestle, a client of Interpublic's McCann-Erickson. Burnett and D'Arcy on the other hand shared several important clients such as P&G and also General Motors. Suddenly the Burnett-D'Arcy merger was back on, and the prospect of buying into that proposition pulled Dentsu off the fence as well. 

The resulting deal, completed in February 2000, combined three important names in worldwide advertising. The Leo Group acquired MacManus for $690m, and sold on a 20% stake in the enlarged business to Dentsu for around $495m. The new entity was provisionally titled Burnett Dentsu MacManus or BDM, before adopting new name BCom3 in March 2000. (This brand was derived, apparently, from a combination of the word "beacon" with a nod towards the dot-com industry). Most significantly of all, the arrangement gave Dentsu access to a first-class global advertising network for the first time Upon completion of the deal, Rick Fizdale and Roger Haupt took on the roles of vice chairman and group CEO, while MacManus's Roy Bostock and Craig Brown were named as chairman and COO/CFO respectively.

The new group won its first shared client in April 2000 with the capture of Polaroid's $150m global account. Burnett's part-subsidiary BBH took charge of creative work from London, Burnett itself handled the account out of the US, while Dentsu managed marketing in Japan. Also that year, the group captured the $2.8bn consolidated media planning account for General Motors (part of which had previously been managed by various Interpublic subsidiaries), forming standalone planning agency GM Planworks in October 2000 to handle the business. Beacon Communications was formed the same month from the merger of D'Arcy and Leo Burnett's respective offices in Japan.

BCom3 had originally announced plans to launch an IPO in 2001. But this move was eventually shelved as a result of the volatility in global stock markets following the collapse of the internet boom. Documents filed with the SEC later revealed that the group had generated revenues of $1.83bn in 2000, but a loss of $66m as a result of around $130m of merger-related charges. For a time, Dentsu was rumoured to have considered buying up the rest of BCom3 with some of the cash generated by its own IPO. However, that plan was later dropped and instead a BCom3 IPO was rescheduled for some time in 2002. Meanwhile, behind the scenes, the group was exploring other plans. In March 2002, BCom3 announced another transformational deal, agreeing to be acquired by Publicis for $3bn. BCom3's senior management team split a $300m windfall in cash and shares from the Publicis deal. Other shareholders in BCom3 were not so lucky, obliged to accept Publicis shares, which later halved in value as a result of economic downturn. See Publicis Groupe for more.

Last full revision 8th November 2017


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