GLOBAL ADVERTISING group Leo Burnett Associates has acquired the Irish-owned agency Larkin Partnership and plans to merge it with its existing operation in Dublin.
Under the terms of the deal, Leo Burnett’s Shane McGonigle will be the enlarged company’s managing director, with Martin Larkin, founder of the Larkin Partnership in 1994, taking on the role of chairman. The new group will handle client contracts valued at more than €20 million annually and will have 25 staff.
Larkin’s eight staff will relocate to the Leo Burnett office at Wellington Road in Dublin.
Mr McGonigle said his company had been seeking to grow by acquisition for the past 18 months.
“We looked at a lot of businesses but Martin’s company was the only one that really interested us,” Mr McGonigle said.
He said that while turnover would be down this year and margins would be tighter, he was confident that the merged groups could post a net profit of at least €300,000 in 2009.
“We were profitable last year in spite of the slowdown and we will be again this year,” he said.
Mr Larkin said that the deal included an earn-out payment for him of between €1 million and €3 million, depending on the performance of the business over the next three years.
Commenting on his reasons for selling the business, Mr Larkin said: “I really did feel that it was a struggle to grow the business because of perceived scale issues. We were finding that more and more.”
Leo Burnett, which opened in Chicago in 1935 after its founder of the same name mortgaged his home, is part of the global Publicis advertising group. Its clients include Kellogg’s, Coca-Cola, Elverys Sports, KBC Asset Management, Bord Bia and drinks giant Diageo.
Larkin’s clients include Dublin based value retailer Penneys/Primark, the GAA, carmaker Nissan/Chevrolet and toiletries group Nivea. Both sides said there were no client conflicts as a result of the deal.
Mr McGonigle said there would be no redundancies as part of the acquisition. “We’ve actually got two positions that we’re hoping to fill shortly,” he added.
Mr Larkin estimates that the Irish advertising market will decline in value by 25-30 per cent overall this year due to the effects of the recession and the sharp slowdown in consumer spending.
