Firm to Pay $40 Million for Ad Agency : Lorimar Will Buy Bozell & Jacobs

Confirming industry speculation, Lorimar said Wednesday that it has signed a letter of intent to acquire Bozell & Jacobs, a New York advertising agency, for about $40 million in cash and notes.

The firm will be merged with Lorimar’s Kenyon & Eckhardt advertising unit to form a new agency to be called Bozell, Jacobs, Kenyon & Eckhardt, officials said. They predicted that the new agency’s advertising billings will reach $1.1 billion this year, making it the 11th largest in the United States and the 15th largest worldwide.

The unit will account for about one-third of the total revenue at Culver City-based Lorimar, which produces TV series, made-for-TV movies and TV miniseries as well as movies for theatrical exhibition. In 1984, Lorimar reported revenue of $263.2 million and profits of $11.7 million.

At a press conference here, Lorimar officials discounted Wall Street speculation that the acquisition means that the company now has less interest in joining the hot bidding for television and radio stations.

Bidding for such properties has grown steadily since the Federal Communications Commission relaxed rules on multiple ownership of stations, and cash-rich Lorimar in April made an unsuccessful $1-billion bid for Multimedia Inc., a station operator based in Greenville, S.C.

Merv Adelson, chairman and co-founder of Lorimar, said the producer of “Dallas,” “The Waltons,” “Falcon Crest” and other TV series is not currently negotiating to buy any stations. “But if we see an opportunity in broadcasting, we’ll be in there,” he said.

Adelson said the company has no present plans to acquire additional advertising agencies, but he said the company might buy another agency in the future to expand further.

He said that Lorimar shares the expectation of many financial analysts that the advertising business will grow faster than the economy as a whole for the next five years at least.

Lorimar declined to provide other financial details of the acquisition, which they expect to be completed by Jan. 1, 1986.

The senior staff of the new unit has been chosen from the senior staff of the two agencies. The chairman of the new agency will be J. Liener Temerlin, now chairman of Bozell & Jacobs; the executive committee chairman will be Leo Arthur Kelmenson, chairman and chief executive of Kenyon & Eckhardt, and the chief executive will be Charles D. Peebler Jr., who is president and chief executive of Bozell & Jacobs.

Most proceeds of the sale will go to Bozell & Jacobs principals.

The majority of shares in the private, New York-based agency are owned by 200 employees, with the largest percentage stakes owned by Peebler, 15%; executive committee Chairman Alan Jacobs, 10%; Chairman Temerlin, 8%, and Vice Chairman Joseph Caggiano, 6%.

Officials said Bozell & Jacobs’ billings were $671 million last year from such clients as American Airlines, Tenneco, Lee Jeans, Minolta and Nabisco.

Lorimar’s Kenyon & Eckhardt unit billed $376 million from such clients as Chrysler, Prudential-Bache, Kawasaki and Holiday Inns, according to the company.

Jeffrey B. Logsdon, analyst with Crowell, Weedon & Co., a Los Angeles securities firm, said Kenyon & Eckhardt is regaining some momentum after several “sluggish” quarters.

The agency has suffered the loss of key executives and the Bristol-Meyers account, its second largest.

More recently, he said, the agency has picked up several new accounts, including Consolidated Cigars and Columbia Data Products, a computer maker.