Black group buys into FCB
22 August 2003
In one of the most important empowerment deals in South Africa's R9-billion advertising industry, a newly formed consortium has acquired a 26% stake in the country's largest marketing communication group, FCB South Africa, for a speculated R120-million.
The agreement is widely regarded as a watershed for the industry, not only because of its size, but because it is the first significant deal to include black staff as well as a broad-based empowerment entity, in a bid to unlock wealth creation opportunities for a broader spectrum of South Africa’s population.
The deal includes an option to increase the consortium’s stake to 35% after a year.
The new consortium comprises two investment companies, Sunrise Investment Group and Zwino Investment Holdings, a broad-based empowerment company, Unipalm Investment Holdings, and a staff contingent of previously disadvantaged individuals from FCB South Africa.
Major partners in Sunrise
Investment Holdings are head of Labat Traffic Solutions Ka Shabangu, Ben Nkosi, and entrepreneur Violet Mphafudi.
Zwino Investment Holdings comprises the chairman of Duka Holdings, Dalubuhle (Dali) Jonas, Drake and Scull chief executive Bonang Mohale, Simeka Investment Holdings director Khehla Shubane, and FCB South Africa group deputy chairman Nkwenkwe Nkomo.
Unipalm Investment Holdings is an empowerment initiative headed by Ragi (Ragavan) Moonsamy and a consortium of well-known South African professionals, including television personality Basetsana Makgalemele-Kumalo.
Established in 1926, FCB South Africa is the country's largest advertising group in terms of revenue, and a leader in providing integrated, media-neutral marketing communication solutions spanning all channels of communication.
In 77 years of operation, FCB South Africa has ranked consistently as one of the top three agencies in the country, and 80% of its clients are currently ranked first
or second in their markets. Its clients include Toyota SA, Vodacom, First National Bank, Siemens, Samsung, the Industrial Development Corporation, Adcock Ingram, Bromor Foods, Shoprite, Distell, Santam, Elizabeth Arden, Media 24, Momentum, Trellidor, Mondi, Huletts, Rainbow Chickens, Unilever, Bonitas, Kraft, and SC Johnson.
The FCB South Africa group manages R1.7-billion of communication spend on behalf of its clients, and employs 700 people in South Africa. Its offering includes six through-the-line agencies and seven business units specialising in communication channels that cover promotions, design, Internet, PR, events, launches, healthcare advertising, financial advertising, CRM and sponsorship.
The group also has a strong presence in Africa, where it has developed the largest agency network on the continent with offices in 32 countries.
FCB South Africa chief executive Neil van der Weele said the deal, involving four independent partners, was "the most
complex, and largest, deal that the advertising industry has seen to date, and differs markedly from those concluded by most agency groups over the past few years.
"From the outset, we were clear that we would not rush into a partnership simply for the sake of doing a deal. Our key objective was to position the group for a very successful, long-term business future, for the benefit of all the partners. We also felt that it was important that the deal benefited a much broader community.
"Staff, too, want to be part of a company that is committed to transformation and the national agenda", Van der Weele said. "There has been an enormous amount of excitement and anticipation from the staff regarding the deal – they realise that the deal will bring with it a lot of new business opportunities and company growth and, through this, opportunities for personal growth."
SouthAfrica.info reporter
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