WPP Acquires Geoff Howe - Analyst Blog

Ireland-based advertising titan WPP Group Plc. (WPPGY), through its global healthcare communications unit, ghg, acquired a 100% stake in Geoff Howe Holdings Inc. The acquired company owns a 100% stake in a US-based agency engaged in marketing of animal health, diet and nutrition products, Geoff Howe Marketing Communications Inc.

Geoff Howe is a US-based company having offices in London and Prague and a client base including Bayer Healthcare, Boehringer Ingelheim, Colgate-Palmolive (CL) and Hill’s Pet Nutrition. Geoff Howe and Geoff Howe Marketing Communications together reported revenues of $6.7 million and gross assets of $4.1 million for the year ended Mar 31, 2010.

In addition to this transaction, ghg will also acquire Hills Pet Nutrition’s European client account and certain UK and Prague-based assets of Geoff Howe. These transactions suffice for the company’s diversification strategies in important markets and sectors.

WPP Group is one of the leading companies providing advertising and communications services worldwide and operating through a number of established global, multinational and national advertising and marketing services companies. New markets, new media and consumer insights are the company’s three areas of strategic focus. Moerover, the company has a dominant market share in many areas and has the pricing power to improve margins and sustain future profit growth.

However, a highly-competitive market, immense international presence and dependence on limited number of clients are the prime causes for concern which may prove to be detrimental to the company’s growth. Prime competitors of the company are Interpublic (IPG), Omnicom Group Inc. (OMC) and Publicis Groupe SA. We, currently maintain an Underperform recommendation on WPP Group.
 
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