Mergers: 2 + 3 = No. 1 in P.R.

Hill & Knowlton often trumpets the triumphs of other companies, but last week the Manhattan firm had something of its own to crow about. Currently the second largest U.S. public relations firm, Hill & Knowlton announced that it would merge with No. 3 Carl Byoir to become No. 1 in p.r. (projected 1986 revenues: $125 million). The proposed $12 million acquisition, coming only two weeks after Hill & Knowlton bought the flourishing Gray and Co. in Washington, will oust Burson Marsteller from the industry's top spot.

The deal was engineered by Hill & Knowlton President Robert Dilenschneider, 43, who took over in March with a mandate to breathe new life into a company that has been suffering from sluggish revenues and ebbing morale. Dilenschneider wants Hill & Knowlton to help its corporate clients deal more effectively with touchy policy issues. Says he: "With all due respect to people who unfurl banners in front of a hot dog stand, that's not my shtick."