WPP, the parent of ad agencies Ogilvy & Mather Worldwide and J. WalterThompson, said that the acquisition will provide it with a broader clientportfolio and a wider array of communications services which will enhancelong-term sales growth prospects.

Young & Rubicam's president and chief executive, Thomas Bell Jr., willbecome chairman of Young & Rubicam following completion of the deal. Thecurrent vice-chairman and chief financial officer Michael Dolan will becomechief executive.

A four-man transition committee comprising Bell, Dolan, WPP chief executiveMartin Sorrell, and WPP finance director Paul Richardson will oversee theintegration of Y&R into the WPP Group.

The deal brings to a close months of heated negotiations between Y&R's chiefexecutive and WPP's CEO, who has been eager to buy the smaller NewYork-based company since at least last year.

The combination will create a marketing and advertising giant with combinedrevenue of $5.2 billion and earnings before interest and taxation of $704million based on 1999 figures. The current combined market capitalisation is$14.5 billion.

The transaction is also expected to accelerate consolidation in theadvertising and marketing industry among the six largest holding companiesin the world, including Omnicom Group Inc., the parent of BBDO Worldwide andDDB Worldwide, and Interpublic Group, the parent of McCann-EricksonWorldGroup and the Lowe Group. Omnicom, Interpublic and WPP are theindustry's three biggest companies.

Under terms of the transaction, Y&R shareholders can elect to receive either0.835 shares of WPP stock or 4.175 new WPP ordinary shares for each Y&Rshare, representing a current value for each Y&R common share of $53.02.This is based on the closing WPP ADR price on May 11 of $63.50. It valuesY&R, on a fully diluted basis, at $4.7 billion.

Y&R has 72.8 million shares outstanding, and a total of about 13 millionoptions and convertible shares outstanding, according to Y&R's investorrelations.

The transaction is an all-stock deal, which will result in an equity splitof around two-thirds of the enlarged group being owned by WPP shareholdersand one-third going to Y&R shareholders.

WPP said the acquisition is expected to be accretive to its earnings pershare in the first full year following completion.

The enlarged group's client base will include the majority of the FortuneGlobal 500 and the Nasdaq 100.

WPP also said it expects to realise significant cost-savings from thecombination. Savings quantified to date are in excess of $30 million perannum, the company said.

-- Kathryn Kranhold of The Wall Street Journal contributed to thisarticle