Adler-Chomsky Ad Agency Heading for the Stock Market

Tel Aviv Stock Exchange issue will value firm at NIS 250-350 million, based on annual profits of NIS 20-30 million.

So far 2007 has been a great year for advertising agency Adler, Chomsky and Warshavsky. Even the coma of former prime minister Ariel Sharon, Reuven Adler's long-time friend, has not seemed to hurt the firm. In fact the agency has seen its business grow dramatically.

In August the company, owned by Adler and Eyal Chomsky, rocketed into the number-two spot, and is now breathing down the neck of McCann-Erickson.

It looks like the two will reach a new record if the stock market keeps on its optimistic ways: They will issue the agency on the Tel Aviv Stock Exchange, the first advertising agency in Israel to do so.

According to estimates, the agency makes NIS 20 million to NIS 30 million a year in profits after taxes. The company will be valued at NIS 250 to NIS 350 million for the initial public offering.

The value is slightly less than the owners hoped for a few months ago, before the drops in world stock markets this summer. Then, estimates were at $100 million - or even higher. Nevertheless, the sum is quite impressive. Since the beginning of the 1990s the advertising industry has been expanding at 5 to 10 percent annually, and Adler-Chomsky has been growing even faster. Around the globe, ad agencies trade at 18 to 20 times earnings, and if the market prices the firm at this level in the future it could double in value.

Adler and Chomsky each own 44.5 percent of the firm, so they each will be worth NIS 110-155 million from the deal. In addition, each has enjoyed tens of millions of shekels in dividends in recent years.

The company employs about 360, and the group also includes a design studio, and interactive media agency, sectoral agencies for the Arab, Russian and ultra-Orthodox markets, an agency for small-budget campaigns, and a direct-marketing firm.

The agency has some of the biggest advertisers in the country among its clients, such as Bezeq, the Mifal Hapayis national lottery, Procter & Gamble, Bank Hapoalim, Home Center and Champion Motors.