The STW merger with WPP  revealed this week telgraphs the emergence of a local firm of advertising, media and marketing services worth more than $1 billion.

The merger will see a combined total of 75 local businesses under the one umbrella including some of Australia’s biggest media names including WPP’s MediaCom, GPY&R and MEC and STW’s J. Walter Thompson and Ogilvy.

In a statement announcing the deal WPP noted i would, “… increase its shareholding from 23.6 per cent to 61.5 per cent . STW, Australia and New Zealand’s leading marketing and communications group, is a publicly listed company, whose shares are traded on the Australian Securities Exchange (ASX: SGN).

“The merged group will have pro-forma LTM revenues of c.A$1billion and EBIT of A$142 million1 and will become the primary vehicle for WPP in Australia and New Zealand. Following the merger, STW will change its name to align it with WPP.”

The union had been simmering for many years with the two companies working previously to create agencies such as Ogilvy and Mather and Singleton. WPP was already a large shareholder in STW. A fully-fledged merger was decided upon earlier in 2015

The combination of WPP’s Australia and New Zealand operations with STW will create a business with reported annual revenue of $847 million and with a combined $142 million in earnings before tax.

Speaking to the Media section of The Australian, STW boss Mike Connaghan (pictured above) said the merger would double the business and bring scale to the operations and drive down costs.

“When you put the two businesses together we’ve really got businesses of scale across every single discipline. Putting the two together is two plus two equals five. Even when we have big pitches here for local clients we’re often asking our WPP partners for help whether it be banking or retail. Being able to tap into WPP has been important, now it’s going to be much easier,” he said.

In a statement, Sir Martin Sorrell of WPP said of the merger: “The merger of our Australian and New Zealand operations with STW, will give us a unique opportunity to offer our local and international clients a comprehensive set of services and to make sure we can offer the best talent through country management. It will also enable STW to focus on the Australian and New Zealand markets, which it knows best, with a structure that will strongly incentivise its people.”

Article republished with permission of B&T

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