British advertising company WPP said on Sunday it won an auction for U.S. rival Grey Global, with what sources familiar with the matter said was a cash-and-stock deal worth about $1.34 billion.
WPP beat smaller French rival Havas and U.S. private equity firm Hellman and Friedman to clinch the deal. WPP declined to comment on the price it paid and said it would provide further details in a statement on Monday morning.
Shares in Grey Global closed up 2.2 percent at $940 on Friday on the Nasdaq exchange.
The deal is the latest in a string of large acquisitions by WPP Chief Executive Martin Sorrell, who has scooped up agencies including Young & Rubicam and Ogilvy & Mather as he has built WPP into the world's second-largest advertising company.
Grey Global, the seventh-largest global ad firm, held a board meeting on Friday to review the bids, after which the company went into contract negotiations with each of the bidders, the sources said. WPP clinched the deal on Saturday with an improved bid, and signed a finalized deal in the early hours of Sunday morning.
In buying Grey, controlled by chairman Ed Meyer, WPP has acquired the last large independent in the advertising sector. WPP coveted Grey because of its blue-chip client roster, especially its longstanding relationship with Procter & Gamble, the world's largest advertiser.
WPP is expected to work to increase Grey's profit margins, which are considerably lower than the industry average, and to reduce Grey's tax burden.
It was not clear if Meyer, who is in line for a large cash payment following the acquisition, would remain with the company where has worked for some 50 years.
WPP will need to move carefully to avoid angering existing WPP clients such as P&G rival Unilever, most likely by housing Grey in a separate advertising network.
Grey was perhaps Havas' last chance to join the top tier of advertising companies, and its failure to secure the deal will spur further speculation about Havas' long-term future as a stand-alone company.
Havas decided to bid for Grey despite opposition from French businessman Vincent Bollore, who owns more than 5 percent of the advertising group and controls 5.22 percent of its voting rights.
Havas declined to comment.
