Foote, Cone & Belding Parent to Buy Rival

The parent of advertising agency Foote, Cone & Belding on Thursday agreed to buy rival Bozell, Jacobs, Kenyon & Eckhardt for $440 million in stock.

The deal, reached after a three-year courtship, would double the size of Foote Cone’s Chicago-based parent, True North Communications, creating the world’s sixth-largest advertising company.

The merger ends True North’s search for a second global agency to complement Foote Cone, known for its Levi Strauss ads. The deal gives privately held BJK&E; greater access to capital needed for expansion, while enriching a group of executives who own a significant stake in the company.

“It is in the best interests of both parties,” said James D. Dougherty, advertising industry analyst for Prudential Securities. “If True North wants to consider itself a big-time player, like Interpublic and Omnicom, it had to acquire another agency.”

Interpublic Group of Cos. and Omnicom Group Inc., both based in New York, are two of the top three advertising holding companies. The world’s largest advertising company, in terms of billings, is WPP Group of Britain.

True North shares jumped $1.81 to $24.88 on the New York Stock Exchange.

The merged company, to be based in Chicago, would have combined billings in excess of $11 billion and more than 11,000 employees. Revenue is expected to be $1.2 billion.

True North said Foote Cone and Bozell Worldwide, a unit of BJK&E;, would operate as separate advertising agencies. Bozell creates ads for Chrysler Corp. and developed the milk mustache campaign.

One casualty of the merger appears to be Mitch Engle, president of True North’s Associated Communications unit, which consists of a hodgepodge of companies involved in advertising, public relations and digital special effects. The unit is being merged into a similar unit at Bozell and would be headed by Bozell’s chief executive, Charles D. Peebler Jr.

True North said Peebler also would become president of True North and a member of its board, along with four other former BJK&E; executives.

Bruce Mason would continue as True North chief executive, but asked outside director Richard Braddock, a former Citicorp president, to assume his role as chairman.

True North said it would take an unspecified restructuring charge when the deal closes, probably in the fourth quarter of 1997.