New pan-African agency giant

Johannesburg - Ogilvy & Mather and Scangroup of East Africa are to create a pan-African joint venture which will see their two ad agency networks operating side by side with a common expansion and growth strategy for sub-Saharan Africa. Both companies are part of WPP, the global communications services group.

The deal is through a share swap in which O&M will exchange its shareholdings in African operations outside of South Africa for a combination of Scangroup shares and cash. The end result will be that Ogilvy South Africa will hold 10%, and WPP 25% of Scangroup, which is listed on the Nairobi Stock Exchange. Ogilvy Worldwide owns 49% of Ogilvy South Africa.

The deal is still subject to regulatory and shareholder approval, but once approvals have been given, Ogilvy Africa and Scangroup’s African operations will operate side by side. Ogilvy Africa is already the biggest pan-African network, headquartered  in Johannesburg with offices in 25 countries providing coverage of 42 countries in all. Scangroup operates only in Kenya, Tanzania and Uganda, but covers some neighbouring territories.

“In each country we will decide which network is appropriate,” says Ogilvy South Africa  chief executive Nunu Ntshingila. “In some markets both brands will operate side by side. This partnership represents an unbeatable combination and we’re excited by the prospects going forward.

"Since the mid 1990s, Ogilvy South Africa has been active in the development of a world-class pan-African communication network. We now need to take this initiative to a new level, and to do this we need to combine our strengths with Scangroup and WPP.”

A new Ogilvy Africa CEO will be appointed to coordinate and service pan-African clients as well as manage network affiliates across the markets from Johannesburg and Nairobi.

Ogilvy East Africa will be a part of this larger network, but within East Africa will operate independently of Scangroup local operations.

Miles Young, Global CEO of Ogilvy & Mather, described the region as “one of the last great frontiers in global communications – and it will be one of the most fertile. Now is the time to invest, ahead of the curve, just as we have done in other developing geographies. Africa’s growing middle class, its increasing political stability, its fast economic growth and its attractive talent base make it a critical component of any truly global business strategy.

“This is the first African powerhouse in the marketing services business – a defining moment."

Scangroup CEO Bharat Thakrar said there’s been “a distinct increase in demand from clients seeking truly pan-African support as well as best-in-class marketing services. Scangroup’s ambition to pitch our regional success across the continent is now a reality.”

 - Fin24.com