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Broad-based Black Empowerment deal gives staff significant share of SA’s leading agency

A broad-based Black Empowerment deal announced this week has given staff at South Africa’s leading marketing communication agency, FCB South Africa, a significant share in its equity.

The deal also increases the agency’s BEE equity ratio from 26% to 35% with immediate effect and has been achieved by the reduction of parent company Draft-FCB/IPG’s stake in the local entity from 74% to 50,1%.

Commenting on the new shareholding, FCB South Africa CEO Neil van der Weele said he was delighted that South Africans now had a greater stake in the company.

“When we approached Draft-FCB/IPG to begin negotiating this deal, we had a wish list,” he said.

“Topping our list was that we wanted more shares in hands of South Africans; we also wanted those shares in the hands of our own staff, both Black and white, so that they could take ownership of the company; and we wanted to improve our BEE equity ratios. Most importantly, we wanted a deal that delivered broad-based empowerment.

“The new shareholding achieves all of this so that ownership and wealth creation opportunities are shared by many and are not limited to a few.

“Our sincere thanks to Draft-FCB’s management who shared our vision and realised the value of the staff ownership model, and then worked with us to bring the deal to fruition,” he said.

FCB South Africa Chairman, Nkwenkwe Nkomo, also celebrated the deal’s far-reaching empowerment implications.

“It gives me a great sense of personal satisfaction that over 70 staff members – with the opportunity to enlist more – will share in FCB South Africa’s future prosperity, and I am sure this keeps us at the leading edge of the industry in South Africa. We have over 40 of our Black staff as shareholders in the company,” he said.

This is FCB South Africa’s second empowerment deal. The first, in 2003, was the industry’s first significant broad-based empowerment deal. Here, a Black-owned consortium – Bourasque – acquired 26% of FCB South Africa from Draft-FCB/IPG (then FCB/IPG). Bourasque, comprised Unipalm, Sunrise Investments and Zwino, each of which held 28% of Bourasque’s shareholding.

Broad-based Black Empowerment deal gives staff significant share of SA’s leading agency

The new shareholding structure sees Bourasque’s portion remain at 26%, Draft-FCB/IPG’s reduce to 50.1% and staff’s share (through a staff trust) increase to 23.9%. At the same time, the 16% staff held in Bourasque has been transferred to the staff trust.

Broad-based Black Empowerment deal gives staff significant share of SA’s leading agency

Asked to list the advantages of the transaction for the company, Van der Weele listed them as:
• Increases FCB South Africa’s BEE equity ratio from 26% to 35% immediately
• Over 40 Black staff will receive shares
• Inculcates an ownership mentality as key staff now have ownership of the company
• FCB South Africa is now 49.9% South African owned
• Will inevitably revitalise entrepreneurialism and energy levels in the business.
• Provides FCB South Africa with the ability to ‘lock-in’ key players
• Allows FCB South Africa the ability to attract heavyweight new talent

“The transaction is ground-breaking in that it is the first in the industry that spreads staff ownership so deeply into an ad agency. We took a very inclusive approach in the structuring of this transaction and it sets us up nicely for the future,” he said.

Van der Weele added that the company had also taken the opportunity to restructure its board and appoint a new Black director.

“Once the new independent director has committed to the company, the board will comprise 50% Black directors,” he said.

“All-in-all, this is an extremely positive way to enter 2007 and we look forward to an exciting year ahead,” said Van der Weele.

22 Jan 2007 13:48

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