Leagas deal not dead yet despite John St. launch

Despite the high-profile addition of four top Ammirati Puris executives and the launch of a new agency brand called John Street, Envoy Communications Group has not given up on its ambition of acquiring U.K.-based creative powerhouse Leagas Delaney.

Despite the high-profile addition of four top Ammirati Puris executives and the launch of a new agency brand called John Street, Envoy Communications Group has not given up on its ambition of acquiring U.K.-based creative powerhouse Leagas Delaney.

John Street, started up earlier this month, is being manned by four former Ammirati executives. Arthur Fleischmann, former president and COO of Ammirati, will be at the helm as president and CEO of John Street. Angus Tucker and Stephen Jurisic, who were co-creative directors at Ammirati, and Emily Bain, director of strategic planning, will all hold the same positions at the new agency.

Fleischmann, Tucker and Jurisic will own a 30% piece of the company, sources say.

The plan to establish and build a global made-in-Canada brand was announced shortly after the Envoy deal to acquire Leagas Delaney fell through late last month.

But Envoy president and CEO Geoff Genovese says more agency acquisitions are still on the agenda and Leagas Delaney remains top of the list.

‘[The company] wanted very much to do the deal. I got a wonderful email from its president the other day and the doors are still open. It’s just that they got killed in San Francisco [when the top four senior executives resigned last month],’ he says.

‘So we said we’d just cool it for a while and maybe in the future we’ll do it. The new team would be thrilled if six months later something like that happened.’

Genovese admits that Envoy has struggled with the advertising part of its business for the past few years in Canada and that having a strong ad agency – the ‘sexy’ part of a communications company – will make the public company more attractive to investors. He says while Envoy is performing well, its stock isn’t right now.

The team at John Street had already agreed to take over Leagas Delaney Toronto if that deal had been consummated. But instead of starting with an international brand, they are building a new company and hoping the reputations they built at Ammirati will give them an entry to new business pitches. It will be the tougher road to follow in a slowing economy, even with a proven, award-winning team.

Fleischmann says it was difficult to make the decision to leave Ammirati because it was a wonderful place to work. Seven years ago he never dreamed he would be its president, but the Envoy opportunity was one he couldn’t pass up.

‘The nice thing is, as a start-up, we hit the ground running,’ he says. ‘It’s a nice way to start an entrepreneurial venture.’

John Street replaces Envoy’s Communique Advertising and takes over its clients Adidas-Salomon, LCBO (Liquor Control Board of Ontario) and the TTC (Toronto Transit Commission). It will also be the brand name that proceeds the name of any other Envoy advertising acquisitions and will eventually preface Hampel Stefanides in New York. (Although the purchase of an agency such as Leagas Delaney might derail that strategy.)

Communique, which has its roots in event marketing, will continue to be the umbrella brand for Envoy’s Live & Incentives (conference, meetings and event division), PR and direct businesses.

Since going public in 1997, Envoy has made some excellent strategic purchases that have built the design and technology end of the company, but aside from the addition of Hampel Stefanides, the advertising end of the business has been weak.

The problems experienced at the Canadian agency were exacerbated by the fact it had been without a creative director or president since last October, just prior to the announcement of the Leagas Delaney offer to purchase.

At that time, Chris Stavenjord, agency president of 16 months and creative director for eight years, was let go. During Stavenjord’s stint at Communique, the agency had worked with clients such as Microsoft, Toshiba and MasterCard.

Forty-nine percent of Envoy’s revenue is currently generated in the U.S., 22% in Europe and 29% in Canada. Envoy reported net revenue of more than $42- million for the six months ending March 31, a 65% jump from year 2000. Most of that is attributable to divisions such as Hampel Stefanides, Sage Information Consultants, Devlin Applied Design and retail design and branding firm Watt International, which has six offices, works in 35 different countries, and reports annual billings of around $50-million.

Meanwhile at Ammirati Puris in Toronto, the mood is optimistic even with the departure of four of its 10-member senior management team.

Doug Robinson, chairman and chief creative director of the Ammirati, says the agency has every reason to be optimistic. It brought two Lions back from Cannes, a Clio from New York – not to mention the creative awards it has racked up in Canadian competitions so far this year.

He is also not panicked about replacing the four staff members, although his first priority will be to fill the president’s chair, with an announcement likely three to four weeks away. Robinson is stepping up to be full-time CD while he takes his time finding the right people.

‘There are very few really talented people out there and everyone wants that star athlete. We spend a lot of time keeping the wolves away. That’s a problem I know I’ll always have.’

And while he understands the desire to take advantage of an entrepreneurial opportunity, he says some staff members are shocked and feel a ‘deep sense of betrayal’ at what they see as Fleischmann spearheading the defection of four key people from the agency.

Ammirati Puris has grown from three to a staff of 85 and boasts a roster of 25 clients including Labatt Breweries of Canada, Labatt USA, Burger King Restaurants of Canada, Fuji, Imax, Johnson & Johnson, UPS, Clarica, Eatons, Sears and Unilever.