Search News

IN one of the biggest deals that the Indian advertising industry has seen so far, Lintas India is selling its 51% locally-owned stake to its international partner, the Interpublic Group (IPG). In a deal believed to be worth at least $100 million, and estimated by some to be worth as much as $300 million, the last of India’s top three agencies to have a majority Indian shareholder will be selling out.

The board of Lintas India confirmed that it has ‘approved in principle’ the proposal to transfer the 51% held by the Lintas Employees Welfare Trusts, and the deal is currently awaiting FIPB clearance. In an email, chairman and managing director Lintas India Prem Mehta said that the move “will further strengthen Lintas India’s readiness to meet the challenges of the new marketing environment.” He pointed out that the decision to integrate India more closely into IPG network was based upon the needs of global clients, the increasing importance of expertise in integrated communication services and the opportunities it would afford Indian managers in the Lintas system.

The deal does not come as a surprise to industry insiders - rumours of Lintas India being ready to divest majority stake had intensified over the last year. Though Interpublic as current stakeholder had first right of refusal, some in the industry believed Mehta had been approached by the world’s largest marketing communication conglomerate Omnicom, in an attempt to raise its profile in India, one of its weakest markets globally. Industry sources also believe the final stake buyout by IPG could perhaps have been hastened by the imminent arrival of creative hotshop Bartle Bogle Hegarty (BBH) in India. BBH has an excellent track record with Unilever, one of Lowe Lintas’ largest clients and handles several of its flagship brands in many international markets.

It was unlikely though that Interpublic, a group that’s had many recent setbacks, would let Lintas India go. The management at Lowe had reiterated that Lowe Lintas was a centre of excellence, and CEO Tony Wright called it a ‘lighthouse office.’ The acquisition of stake gives Lowe a greater control over Indian operations. According to president and COO Lowe Lintas Pranesh Misra, “They will have a say in how we progress and a stronger footprint by acquiring Lintas India. They will also able to consolidate the Indian figures in the global balance sheet which is not insignificant.”

Apart from Lowe Lintas, its flagship advertising agency brand, the deal covers
Lintas Media including Initiative Media, Insight, Interactions, Intellect and Media Futures, as well as the Integrated Marketing Action Group consisting of Lintas Personal, Linterland, LinOpinion, Advent, Lintertainment, Lintas Healthcare, dCell and Aaren Initiative. Not included is one of Lintas’ recent ventures - the Northpoint Learning Centre at Lonavala near Mumbai. It’s been one of Mr. Mehta’s pet projects and will continue to be owned by Lintas’ shareholders.

Of more immediate interest is the question of what Lintas’ India operations gains. Mr. Mehta has always maintained that any decision to sell the Indian shareholders’ stake would only be taken after due consideration of the interests of the agency, and the people working there. According to Mr. Misra, “For the average employee, it opens up opportunities for global training, cross-border placement, exposure to international tools and services, especially in the below the line field.” CEO Percept H and the former head of the Lintas group agency SSC&B Lintas Ajay Chandwani said, “It’s a fitting reward for a company that has done better than the international counterpart.”

Others in the industry are more sceptical. They point to the fact that the composition and shareholding patterns of the members of the trust have been shrouded in secrecy, which has led many to believe that the principal beneficiaries will be a select few senior personnel, and not the majority of staff. An ex-employee says, “Unless things have changed, the individual employee shares are very meagre.” An old Lintas hand who quit the agency a few years ago, and is currently CEO of the Percept Picture Company Preet Bedi said, “If the money is being shared among employees it is good and if it’s not, well that’s life!” He points out that when IPG’s stake went up from 40% to 49%, in 2001, the employees were not profited in a material way. He says, “I hope they benefit from the current terms.” Perhaps the strongest reaction came from advertising legend and former Lintas CEO Alyque Padamsee, who set up the Lintas Employees Welfare Trust in the 1980s.

He said, “I’m shocked and disappointed. I established the trust to keep Lintas India, as it was known at the time, as an Indian entity. Furthermore, I felt that since advertising is a people oriented business, the employees should have a stake. I cannot understand what benefit the employees welfare trust will get on selling the 51% stake. Does any Indian agency really need the heavy hand of a MNC on its shoulder?”

Ownership may have changed, but the devil lies in the details of exactly how — and to what degree — all the concerned parties will benefit from this.

Find Lawyer / Law Firm

Extradition Law in India

Every time an offender stealthily leaves India to take refuge in another country, the Government of India starts all over again with its strategy of bringing him back to the nation to make him stan More

Legal Consultation - Consult over phone, chat or send questions

Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion  More