The two companies have agreed the deal in principle and WPP is completing due diligence, according to reports.
WPP plans to create WPP Russia by merging its own Russian operations, including advertising agencies Ogilvy & Mather and PR firm Hill & Knowlton, with local agencies owned by Video International.
WPP has a much smaller presence in Russia than in other markets. Approximately 40% of WPP companies will be included in the merger but the company aims to become the senior partner by paying several million dollars to Video International to take a 51% stake.
The new company is expected to generate annual revenues of about £16.3m.
Until recently, Video International made most of its money through a media buying monopoly for Russia's two largest state-owned TV channels, Rossiya and First Channel.
The government recently intervened, however, and forced the agency to choose between the two. Consequently, it now only works for First Channel. Video International also owns a number of ad agencies.
WPP first considered working with Video International in 1997 to help service clients with major interests in Russia, such as BP. In the end, talks broke down.
Video International was founded by Mikhail Lesin, a former minister for press and information, who is now an adviser to Putin. He claims he has no longer any links with the company.
WPP recently announced it is forming a multinational joint venture with VNU of the Netherlands. The group is also in talks to bid for Grey Global, in a deal thought to be worth around $1.3bn.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .
.jpg)
.jpg)