British Firm Begins Expected JWT Takeover Bid

A leading British marketing services firm launched a hostile $45-a-share bid Friday for JWT Group, the New York parent of the J. Walter Thompson advertising agency and the Hill & Knowlton public relations firm.

A spokesman for JWT said the $432-million offer by London-based WPP Group was expected. “We’re continuing to review our options, including the offer,” the spokesman said.

A source close to JWT indicated that those options included looking for another buyer outside the advertising industry. One company said to be interested was MCA, the Los Angeles entertainment concern. Hal Haas, MCA’s chief financial officer, said: “It’s a matter of policy not to comment on speculation about acquisitions.”

JWT has been viewed as a takeover candidate since January, when the head of its flagship J. Walter Thompson ad agency delivered an unsolicited offer from an outside group that would have deposed Chairman and Chief Executive Don Johnston. Since then, a number of top executives have been let go.

The price of JWT shares rose Friday on the New York Stock Exchange as traders speculated that a competing offer for the company would surface. Its shares closed at $50.625, up $1.625 in composite trading.

Wall Street sources said that about 35% of JWT’s shares were now in the hands of arbitrageurs, or professional stock speculators. Many institutions have sold their JWT shares since WPP made its bid for the company on Wednesday, sources said.

With much of the company’s shares in the hands of speculators, “it looks like that’s it for JWT. It’s going to be sold, either to WPP or someone else,” said one Wall Street source. The source noted that WPP has lined up enough financing to pay $53 a share and that most professional speculators would hold out for a higher bid.

JWT said its board expected to meet with its investment advisers, Morgan Stanley & Co., by “midweek” to review its options. A source close to JWT indicated that the firm was loathe to accept WPP’s offer since it could mean the return of some of the executives who were let go in January.

JWT got some support from a few of its big clients on Friday. Robert L. Rewey, a vice president at Ford Motor Co., JWT’s largest client, told Johnston in a letter that a change in JWT’s management could have a detrimental effect on Ford’s account.

Eastman Kodak Vice Chairman J. Philip Samper also expressed support for JWT. “We view any change in management and ownership of JWT as negative and disruptive,” he said in a statement.

But Joel Weiner, Kraft executive vice president for corporate marketing services, said the dairy products company wouldn’t necessarily take its business elsewhere. “We continually evaluate their performance in building our business,” he said in an interview. “But we expect to continue our relationship with them.”