Gray & Co., the largest Washington-based lobbying and public relations firm, announced yesterday that it will acquire The Strayton Corp., a Wellesley, Mass., public relations and advertising firm that specializes in high-tech clients.
The acquisition, expected to be completed by Oct. 1, will create one of the largest firms in the public relations industry, with combined revenue expected to exceed $20 million, Gray said in a statement.
"It always has been our intent to grow rapidly, and to position ourselves to take advantage of opportunities to become a model of the 21st century public communications company," said Robert Keith Gray, the chairman of Gray & Co. "In Strayton, we have found an entity as proficient in its market as we are in ours."
Both companies refused to disclose the terms of the purchase. A financial analyst at a local stock brokerage firm, however, estimated the purchase price for Strayton at $7 million. He said the calculation is based on Strayton's fiscal 1983 revenue, and assumes an average 15 percent pre-tax profit and average 40 percent tax rate that is commonly used in calculating the purchasing price of an advertising business.
Strayton, founded in 1969, provides marketing, public relations and advertising services for more than 250 clients, many in high-tech industries. The company, which reported revenue of $8 million for the fiscal year ended July 31, has offices outside Boston, in Santa Clara, Calif., and Dallas, and an affiliate in London.
"Gray & Co. was looking for a high-tech firm, and we wanted to expand our informations system," said Robert Strayton, the company's founder. "So, we got married and brought our separate skills into one organization."
Gray's new subsidiary, which will be called Gray Strayton International, will remain in Wellesley with no expected changes of management or employes, the company said. Robert Strayton, who is founder of Strayton, will be president of the subsidiary and executive vice president of Gray & Co.
Strayton, who worked in the White House press office in the Eisenhower administration, founded the firm after he left the Computer Group of Honeywell Inc., where he was director of merchandising and public relations.
Gray & Co., which was founded in March 1981, earned $1.1 million in the fiscal year ended Feb. 29 on revenue of $11.4 million. Gray, which sold stock to the public in February, earned $292,504 in its first quarter ended July 16.
Robert Gray, a former Eisenhower administration official, was co-chairman of President Reagan's inaugural committee. Other officers of the firm include Frank F. Mankiewicz, former president of National Public Radio, and Alejandro Orfila, who was secretary-general of the Organization of American States.
Strayton's more than three dozen clients in computers and electronics include M/A Com Inc., the Massachusetts firm that is one of the biggest employers in Montgomery County; Grid Systems Corp., maker of a sophisticated notebook size computer; Harris Corp., a Dallas communications equipment firm, and Micropro International, makers of the popular WordStar program.
Gray's clients include the governments of Canada and Turkey, American Express, Bell Atlantic, Diamond Shamrock Corp., National Broadcasting Co., Tenneco Inc. and the Japanese Electronics Industry Association. Its biggest client is the Kennedy Center for the Performing Arts, for which it was handling $2.5 million worth of publicity and advertising last year.
Gray said that the acquisition of Strayton is the first step in a continuing expansion for the company, which plans to start shopping for a marketing firm.