Havas/Snyder Deal: Havas CEO insists the price is right

’No, no, no, Stefano, it is not expensive,’ an animated Alain de Pouzilhac exclaims as we begin a telephone interview from Paris. ’Maybe our competitors are saying it is expensive, because they are disappointed. But if you see the calculations we have made ...’

’No, no, no, Stefano, it is not expensive,’ an animated Alain de

Pouzilhac exclaims as we begin a telephone interview from Paris. ’Maybe

our competitors are saying it is expensive, because they are

disappointed. But if you see the calculations we have made ...’



It’s Monday afternoon, and de Pouzilhac, the chief executive of Havas,

is ready for the money question. He’s been fielding it in Paris all

day.



That morning, Havas had ended weeks of speculation by announcing that it

was to acquire the Snyder Communications group for dollars 2.1 billion.

It is the largest purchase in advertising history.



Critics would say that at dollars 2.1 billion, Snyder is up to dollars

600 million overvalued. They argue that the group lacks a worldwide

advertising agency network, that it is a loose grouping together of

companies, and that there is little added value from the centre.



What’s more, they claim that Dan Snyder, the 34-year-old Marylander who

built the group in little more than a decade, was desperate to sell.

That since he acquired the Washington Redskins (as part of a consortium

of private individuals because NFL rules prohibit corporations owning

franchises) he had lost interest.



Not only that, according to the sceptics, the Snyder share price, which

had peaked at dollars 52 a share in April last year, was never going to

recover to its previous level. Despite restructuring the group and

splitting the stock, Snyder was finding it difficult recovering much

past dollars 20 a share. So, was this an expensive firesale?



’Today, we are very highly valued in our market, and they are not in

their market,’ de Pouzilhac says. ’If we had to pay in cash, OK, perhaps

then that would be expensive, but no-one in advertising has realised

this kind of accretive deal before.’



This is a reference to the complicated way in which Havas will acquire

Snyder in stock. Essentially it is paying dollars 29.50 a share for

Snyder in future Havas stock (Snyder was at dollars 21 a share, close of

play on Friday).



A US listing is expected once the deal clears anti-trust hurdles in the

early summer.



Havas’s stock has already soared this week on a favourable response to

the deal. The French stock exchange, the Bourse, has bought de

Pouzilhac’s rationale for the move, and it must be said that Snyder

appears to fit better with Havas, with fewer conflict or ego issues than

with any of Havas’s rivals.



So it is that Arnold Communications will lead the relaunched Campus,

Havas’s second network; Brann and Circle.com will join with Euro’s

diversified services to create a real below-the-line and interactive

powerhouse; and Bounty SCA, the healthcare marketing wing (known to so

many new parents for its Bounty baby books), becomes part of Euro

RSCG.



’There is no conflict for the simple reason that we put the different

companies in different divisions,’ de Pouzilhac continues. ’Bounty is a

jewel; Arnold has a great creative reputation and will lead Campus, and

Brann and Circle take our diversified income from 35 per cent to

something like 50 to 60 per cent.’



De Pouzilhac is equally pleased to have tied in the senior management of

the Snyder companies, particularly the Arnold CEO, Ed Eskandarian (who

was once made rich by Robin Wight in a previous lifetime), who has

signed for three years.



Eskandarian already had plans to expand Arnold in New York. This will be

the next development down the line. In fact, the only apparent conflict

situation in the entire deal is Partners BDDH’s Mercedes and Co-op Bank

accounts, and WCRS’s BMW and First Direct clients. But, to be honest,

London is less of a factor in this particular deal than Cirencester,

home of Brann.



’We haven’t discussed the agency situation in London,’ de Pouzilhac

concedes.



’They are both very successful. We will be transferring the Campus HQ

from Europe to Boston, but it is too early to speak of anything

else.’



De Pouzilhac adds that Snyder’s Bethesda, Maryland HQ will gradually

become less significant. Hardly a surprise there, but what of Dan Snyder

himself? Will he now concentrate on running his beloved Washington

Redskins?



Details regarding his future were noticeable for their absence from the

Havas press release.



’Dan Snyder will be out as chairman and chief executive, yes,’ de

Pouzilhac confirms. ’But as a shareholder he will be there till the end

of the year, minimum.’



While rivals are busy carping, de Pouzilhac, high on the adrenaline of

the day, can scarcely conceal his glee at pulling off his deal. ’It

changes totally the scale of the Havas Group. At this time it has been

very well received in Paris,’ he says.



And both of those statements are, unquestionably, true. Havas’s soaring

stock this week only emphasises the point. As if to underline what

doesn’t need underlining, Bob Schmetterer, the worldwide CEO of Euro

RSCG, calls later before the two men get on a plane to conduct an East

Coast roadshow explaining the deal.



’They are all fast-growing and profitable companies,’ he says. ’Look at

the fit and tell me where are the other Branns? The other Arnolds?



The justification for any perceived premium is in the assets. You know,

people who don’t make deals always think they are expensive.’



Perspective, p14.



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