A big player in the Hollywood entertainment-marketing scene is buying Chicago-based marketing services firm Upshot–known for its deep consumer marketing–months after the company was put into play.
Los Angeles-based Equity Marketing Inc.–known for its tight ties with Burger King Corp. and a lucrative licensed products business that helped catapult “Shrek” to one of the most marketed characters in Hollywood–agreed Thursday to buy Upshot from its bankrupt owner, Ha-Lo Industries Inc.
That Equity emerged as the eventual winner surprised some in the industry, who expected Upshot to be sold to a big agency holding company looking to fill out its portfolio of services.
The sale price wasn’t disclosed, but sources said Ha-Lo, which filed for bankruptcy protection late last year, didn’t fetch nearly the hefty $58 million sum it paid for Upshot in 1998.
At that time, Ha-Lo, along with the stock market, was flying high and looking to extend well beyond its traditional promotional products business.
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Following completion of the deal, Upshot chief John Kelley, and his chief management officer, Carol Griseto will step down. They acquired what was then PMI in 1994, and renamed it Upshot.
The executives, who received the lion’s share of the proceeds when Ha-Lo bought Upshot, had spent most of the last several months talking to potential suitors.
The deal ends a tumultuous few years for agency staffers, who could only watch while Ha-Lo made a series of bad acquisitions, including buying money-losing online promotions firm Starbelly.com for a whopping $240 million. By then, Kelley had moved up to run Ha-Lo, but returned to the Upshot helm last year when Ha-Lo, which lost nearly $50 million in 2000, headed toward bankruptcy.
Through the 1990s, Kelley had helped Upshot amass a reputation as one of the most innovative consumer promotions shops in the country, with clients that included Hallmark, Coca-Cola and Kellogg.
Indeed, had things gone differently, it is likely that Upshot would have fared much better in a sale. Marketing firms that specialize in sales promotion, event marketing and similar functions have watched their value climb as big ad agency holding companies look for ways to increase revenue.
What is not clear is the extent of any client fallout with the departure of Kelley and Griseto. Upshot President Brian Kristofek appeared optimistic Thursday, saying the current management team had deep relationships with its client base.
“This management team has been together for some time,” he said. “We don’t expect any changes.”
On Thursday, Kristofek, who has been with the agency since 1996, said the Equity deal will give the agency the resources it needs to grow.
Kristofek said that the two companies don’t overlap in terms of their service offerings, and have no client conflicts.
Kristofek also said he doesn’t expect job losses from the deal, aside from some back-office overlap.
The sale is subject to auction and still needs bankruptcy court approval, which could come in the next two months.
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