The British marketing agency behind campaigns for West End musicals including Miss Saigon and Mamma Mia! is merging with its Broadway counterpart in a deal reflecting the globalisation of theatre productions.

First Artist, the marketing, sport and entertainment management group, will acquire SpotCo, of New York, which has worked on campaigns for musicals including Chicago and Rent, and will combine it with Dewynters, based in London.

The $18.9 million (£9.9 million) deal illustrates the growing interest in entertainment marketing and follows collaboration between the two agencies on worldwide campaigns in the past decade, including Chicago, which reached 28 countries.

In recent years theatrical hits in New York or London have soon tended to migrate across the Atlantic.

Dewynters has long-established relationships with key figures in the West End, such as Lord Lloyd-Webber, the composer, and Sir Cameron Mackintosh, the producer. It creates advertising campaigns, prints programmes and produces merchandise. It is best known for designing the signature cats' eyes for Cats and the mask for Phantom of the Opera.

The agency was established in 1976 but was founded in 1872. The acquisition follows an announcement by First Artist last month that it had ended discussions over the possible sale of Dewynters, after two unsolicited approaches this year.

First Artist said: “It is the opinion of the board that shareholders' interests will best be served by the retention of Dewynters and the complementary acquisition of SpotCo, which will give the group a dominant position in live entertainment advertising in the world's two most important markets: London's West End and New York's Broadway.”

Jon Smith, chief executive of First Artist, told The Times that theatre was proving resilient during the credit crunch and that new productions were coming to London, including Oliver! and Priscilla, Queen of the Desert.

The deal comprises an initial payment of $5.5 million, followed by three guaranteed payments of $1.5 million. Deferred payment will be made over the next three years, depending on SpotCo's achievement of financial performance targets.

First Artist's shares have been suspended from trading on AIM until a London Stock Exchange admission document for the enlarged group is published. The shares are expected to relist on AIM in October, subject to shareholder approval.

Theatrical producers, in common with other advertisers, are encouraging agencies to develop advertisements for the internet.

SpotCo recently created a campaign for the musical Xanadu that appeared on websites such as YouTube. The clips featured a fictional character, Cubby Bernstein, with Broadway stars, including Nathan Lane and Patti LuPone.

SpotCo was founded in 1997 by Drew Hodges, its president and chief executive, who will remain with the business with his executive team.

The agency is working on DreamWorks Theatrical's first musical, Shrek; the stage adaptation of 9 to 5; with Universal's Working Title on Billy Elliot; and a revival of West Side Story. The acquisition of SpotCo has been funded through a £16.4 million banking facility provided by Allied Irish Bank.

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