Grey Global Group Inc.

WPP Group PLC
13 September 2004

Grey Global Group Inc.





Introduction



The board of WPP Group plc ("WPP" or the "Company") announces the execution of
a merger agreement with Grey Global Group Inc ("Grey").  Upon completion of this
merger, WPP will own the entire share capital of Grey. The merger has been
approved and is recommended by Grey's board of directors.



Under the merger agreement, the value of the consideration offered by WPP to
Grey shareholders is $1,005 per Grey common share. WPP will pay in aggregate 50%
of the consideration in cash and 50% of the consideration in WPP equity using a
fixed exchange ratio (1). Full details of the operation of this merger are set
out below in the section entitled "Other Information".



The merger values the fully diluted share capital of Grey at approximately
$1,520m (£845m). Grey had net cash of $172m as at 30 June 2004. The net
consideration of the transaction, taking into account this net cash balance and
the proceeds from the exercise of all options, is approximately $1,309m.



The cash consideration payable to Grey shareholders in the merger will be
financed with cash from existing facilities.  Based on the number of Grey common
shares and assuming the exercise of all options currently outstanding, WPP
expects to issue in the merger approximately 82.2m new ordinary shares,
representing approximately 6.5% of the enlarged issued share capital of WPP.



1. Based on a closing share price of WPP ordinary shares on 10 September 2004 of
514p and an exchange rate of £1 = $1.7982



WPP Rationale for the Offer



The board of WPP is committed to delivering added value to its clients, its
shareowners and its people by continuing to be a leading company in the global
advertising and marketing services industry. This will be achieved by providing
multinational and local clients with comprehensive solutions to reach their
customers, build their brands, enhance their market position and develop
superior service capabilities in an efficient manner. The board continues to
believe that access to high quality strategic advice, research and specialist
communication skills is critical to providing clients with these comprehensive
solutions. The addition of Grey to the Group will:



•         Add clients in new areas, including P&G (the world's largest
advertiser), 3M, Adobe, Boehringer Ingelheim, JPMorgan Chase, Conagra, Hasbro,
Mars, and Warner Bros.

•         Strengthen the relationship with existing clients including BAT,
Diageo, gsk, Nokia and  Pfizer

•         Make available to clients Grey's strong brands in advertising, media
investment management, healthcare, direct & interactive, sales promotion and
public relations

•         Give the enlarged WPP Group and its clients the benefits of the
acknowledged excellence of Mediacom and the benefits of scale in media buying

•         Increase the revenue of the group in the key faster growing markets in
Asia and Latin America to more than £750m on a combined basis



The board believes there are significant opportunities for margin and cash flow
enhancement and tax rate improvement, as well as increased organic growth for
the enlarged group.



Commenting on the announcement, Sir Martin Sorrell, Group Chief Executive of
WPP, said:



"The addition of Grey Global Group to WPP will bring a number of benefits to our
clients, our people and our shareowners.  In addition to broadening our
relationship with a number of our leading clients, Grey will bring access to new
clients, strengthen our activities in advertising, media investment management,
public relations, healthcare and direct and interactive.  Additionally, Grey's
broad geographic spread will further strengthen WPP's market position.  We
believe that WPP will offer Grey's clients and its people significant enhanced
opportunities.  All of us at WPP are excited by the prospect."



Commenting on the announcement Ed Meyer said:



"We are pleased to join WPP, one of the world's leading advertising and
communications firms and a company we have long respected, because of our shared
values and strong commitment to superior client service,"



"Grey's greatest asset is its people, and while the ownership structure will
change, our day-to-day business relationship with our clients will remain
unchanged and our commitment to do great work will continue to be our passion.
By agreeing to combine with WPP, our clients will be able to access a broader
array of global services and tools, and our employees can expand their careers
in exciting directions."



Mr. Meyer continued:



"I have spent my entire working career, nearly 50 years, at Grey helping
companies build many of the world's greatest brands. I am equally proud of the
work I have done to build the Grey brand. I am personally committed to a very
smooth integration and to Grey's continuing success."





Financial Benefits for WPP



The board of WPP expects the transaction to be accretive to earnings in 2005,
with further accretion in 2006 and 2007(1). Synergies of £11m ($20m) have been
identified from parent company, worldwide and regional infrastructure.



In addition to these benefits, WPP and Grey management see further opportunities
for margin improvement from:



  • Staff productivity
  • Combining property and IT infrastructure
  • Leveraging more effectively the combined purchasing arrangements



Operating Margins(*) (%)


                           2003                   2005                    2006

                          Actual                 Target                  Target
WPP                        13.0                   14.5                    15.0
Grey                        5.8                   10.5                    11.5
Combined                   11.8                   14.0                    14.5
                       

* Before goodwill amortisation and impairment, amounts written off fixed asset
investments, and FRS17 interest

1. The statements in this paragraph should not be interpreted to mean that
earnings per share will necessarily be greater than those for the relevant
preceding financial periods



The enlarged group's long term margin goals remain unchanged. WPP businesses
without Grey maintain the 2006 margin target of 15% or more, giving a new target
for the enlarged group of 14.5% or more for 2006.



The acquired businesses are targeted to deliver a return on capital employed
above WPP's weighted average cost of capital in 2007, when the Grey margin is
targeted to reach 12.5%.



Grey had cash of £272m, debt of £177m and net cash £95m on the balance sheet as
at 30 June 2004. WPP believes there are further opportunities to improve on
working capital performance. WPP has adopted a prudent financing structure for
the deal and the cash element will be funded from existing resources; WPP would
expect to maintain its existing credit rating. On a pro forma basis, the
anticipated credit ratios for 2004 would be better than those for 2001 and 2002.
As strong cash generation allows the Group to pay down debt, the credit ratios
should improve further.





Management and People



Grey's advertising agency businesses will be run as an independent unit within
the WPP group of companies, increasing the Group's ability to manage sector and
network conflict; the business operating brands will report to the Chairman and
CEO of Grey. Mediacom, Grey's media planning and buying unit, will explore
opportunities to leverage the media buying scale of Group M, WPP's media
investment management parent company.



WPP believes that the management and people of Grey will benefit from the
enhanced career opportunities available within the WPP Group.



Ed Meyer, Grey's Chairman, President and CEO, has entered into a new employment
agreement with WPP under which he has agreed to continue as Chairman and CEO of
Grey until at least 31 December  2006.  Mr. Meyer has agreed to serve as CEO and
Chairman of Grey Worldwide until a successor is appointed, which is targeted to
be six months after completion. After that appointment has been made Mr. Meyer
would be offered a position on the board of WPP.  Mr. Felsher, and other senior
management of Grey, will continue under their existing contract arrangements.





Information on Grey



Grey was founded in 1917 as an advertising agency in New York and has grown to
become a full service advertising and marketing services company with operations
in almost 90 countries. In 2003, Grey had revenues in excess of $1.3bn and
approximately 10,500 people. Grey's reputation for account management and
dedication to increasing the value of the clients' brands has earned the loyalty
of numerous long-standing advertisers, not least Procter & Gamble, a client for
more than 40 years.



Advertising Age ranked Grey Global Group as the 7th largest advertising
organisation worldwide in 2003.



For the year ended 31st December 2003, Grey reported net assets of $276.1m
(£154.8m using the WPP closing balance sheet exchange rate of £1 = $1.7833). As
at 30th June 2004, Grey had net assets of $303.0m (£167.0m using the WPP closing
balance sheet exchange rate of £1 = $1.8144).



Illustrative Combination for 12 Months ended 31st December 2003


                        WPP Statutory        Grey          Illustrative
                                            (4,5,6)       Combined Pro-forma
                             (£m)            (£m)                (£m)
Revenue                   4,106.0            799.3             4,905.3
Operating Profit (1)        493.0             45.6               538.6
Associate Income (2)         40.5              0.7                41.2
EBIT                        533.5             46.4               579.9
Interest (3)                (60.1)            (5.2)              (65.3)
PBT                         473.4             41.1               514.5



1. Excludes goodwill amortization and impairment of £77.7m

2. Excludes goodwill amortization and impairment of £34.3m

3. Excludes FRS17 interest of £11.5m

4. From Grey Global Form 10K

5. Grey P&L has been translated at the average rate for the WPP P&L of £1 =
$1.6356

6. Income from Grey associates has been included in the EBIT line at an assumed
tax rate of 40%





Other Information



In order for the merger to be completed, the merger agreement must be approved
by a vote of Grey shareholders holding at least two-thirds of the voting power
of all Grey shareholders (with holders of Grey's Class B common shares entitled
to ten votes per Class B) and by a vote of at least two-thirds of all the Grey
outstanding common shares (with holders of Class B common shares having one vote
per share). Mr. Meyer has agreed to vote all of his Grey common and Class B
shares in favour of the transaction, representing approximately 43.5% of the
total voting power and 20.5% of the outstanding common shares.



The merger is also subject to other customary closing conditions, including
regulatory approval, and is expected to be completed around year-end. The
transaction does not require WPP shareholder approval.



For 50% of Grey's outstanding common shares, WPP will pay $1,005 per share in
cash, and for each of the remaining 50% of Grey's shares, WPP will issue 108.734
WPP ordinary shares or 21.746 WPP American depositary shares (each representing
five newly issued WPP ordinary shares). Before completion of the merger, each
Grey shareholder will be given the opportunity to elect to receive either cash
or share consideration for his or her Grey shares.  These elections will be
subject to pro ration in the event that Grey shareholders elect to receive cash
or share consideration for more than 50% of Grey's outstanding common shares.
Grey shareholders who fail to make an election will receive either cash and/or
share consideration depending on the elections made by other shareholders.



Under the terms of the indenture governing the 5% Contingent Convertible
Subordinated Debentures of Grey due 2033, holders will be permitted to convert
each debenture into Grey shares at a conversion price of $961.2 prior to
completion of the merger. In addition, the indenture requires Grey to offer to
redeem all outstanding debentures after completion of the merger for a
redemption price equal to the outstanding principal amount of the debentures
($150 million in total) plus accrued interest. Each debenture remaining
outstanding after the merger will be convertible, in accordance with the terms
of the indenture, into the number of WPP American depositary shares and/or
amount of cash that would be paid in the merger to a Grey shareholder who holds
Grey shares and does not make a cash or share election with respect to those
shares.





Information on WPP



WPP is one of the world's leading communications services groups. Through its
operating companies it provides a comprehensive range of communications
services. These services include: advertising; media investment management;
information and consultancy; public relations and public affairs; branding and
identity; healthcare and specialist communications. The Company employs
approximately 72,000 people (including associates) in 1,700 offices in 104
countries, providing communications services to more than 300 of the companies
that comprise the Fortune 500, over one half of the companies that comprise the
Nasdaq 100 and more than 30 of the companies that comprise the Fortune e-50.
Clients include The Ford Motor Company, IBM, Unilever and American Express. As
at 10 September 2004, WPP had a market capitalisation of approximately £6.1
billion.





Enquiries:



A briefing for investment analysts will be held in the King Edward Hall at the
Merrill Lynch Financial Centre at 2.30pm UK time  (9.30am EST) on 13 September
2004. UK and US dial-in details are available from Buchanan Communications on
[phone].



For further information contact:

WPP                                  Telephone

Sir Martin Sorrell:           [phone]

Paul Richardson:               [phone]

Feona McEwan:                 [phone]

Buchanan Communications

Richard Oldworth              [phone]



Merrill Lynch International, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting as financial advisor and
broker and has provided financial advice in relation to the merger to WPP Group
plc and no one else in connection with the merger and will not be responsible to
anyone other than WPP Group plc for providing the protections afforded to
clients of Merrill Lynch International or for providing advice in relation to
the merger.



Morgan Stanley, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting as financial advisor and broker to the
transaction and has provided financial advice in relation to the merger to WPP
Group plc and no one else in connection with the merger and will not be
responsible to anyone other than WPP Group plc for providing the protections
afforded to clients of Morgan Stanley or for providing advice in relation to the
merger.



Fried, Frank, Harris, Shriver & Jacobson LLP, Davis & Gilbert and Allen & Overy
are acting as legal counsel to WPP Group plc in connection with the merger.


INVESTOR INFORMATION

This communication is being made in respect of the proposed merger involving WPP
Group plc and Grey Global Group Inc.  In connection with the proposed merger,
WPP and Grey will prepare a registration statement on Form F-4 containing a
proxy statement/prospectus for the stockholders of Grey to be filed with the
SEC, and each will be filing other documents regarding the proposed merger, with
the SEC.

INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.

Investors will be able to obtain the documents free of charge at the SEC's
website (www.sec.gov).  In addition, documents filed with the SEC by WPP may be
obtained free of charge by contacting WPP at 125 Park Avenue, New York, NY
10017, [phone]. Documents filed with the SEC by Grey will be available
free of charge by contacting Grey at 777 Third Avenue, New York, NY 10017, +1
212 546 2000.

INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECITUS CAREFULLY WHEN IT BECOMES
AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION.

Grey and its directors and executive officers may be deemed to participate in
the solicitation of proxies in respect of the proposed transactions. 
Information regarding Grey's directors and executive officers is available in
Grey's Amendment to their Annual Report for the year ended December 31, 2003,
which was filed with the SEC on April 29, 2004.  Additional information
regarding the interests of such potential participants will be included in the
proxy statement/prospectus and the other relevant documents filed with the SEC
when they become available.


Private Securities Litigation Reform Act Safe Harbor Statement



The statements, analyses, and other information contained herein relating to the
proposed merger and anticipated synergies, savings and financial and operating
performance, including estimates for growth, trends in each of the operations
and financial results, the markets for products, the future development of
business, and the contingencies and uncertainties of WPP Group plc and Grey
Global Group Inc. to which WPP and Grey may be subject, as well as other
statements including words such as "anticipate," "believe," "plan," "estimate,"
"expect," "intend," "will," "should," "may," and other similar expressions, are
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995.  Such statements are made based upon management's current expectations
and beliefs concerning future events and their potential effects on the company.



The forward-looking statements are subject to various risks and uncertainties,
many of which are difficult to predict and generally beyond the control of WPP
and Grey, that could cause actual results to differ materially from those
expressed in, or implied by, the forward-looking statements.



These risks and uncertainties include those discussed or identified in the
public filings with the U.S. Securities and Exchange Commission made by WPP and
Grey as well as those associated with the realization of expected earnings
accretion, margin improvements and cost savings, synergies, efficiencies and
other benefits anticipated from the merger, including the risk of loss of key
employees and client business in connection with the transaction and the risk
that the completion of the merger may be delayed for regulatory or other
reasons.


Neither WPP nor Grey undertakes, and each specifically disclaims, any obligation
to update or revise any forward-looking information, whether as a result of new
information, future developments or otherwise.




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