If Maurice Levy is advertising’s modern-day Napoleon, then his
tangle with True North, the FCB holding company, may turn out to have
been his Waterloo.
Last week’s defeat of the Publicis chairman’s attempt to pave the way
for a takeover of his former global partner, by torpedoing its dollars
440 million merger with Bozell, was of a scale that surprised even the
In the end, Levy’s cavalry charge was no match for the combined heavy
cannon of the US legal system and the advertising establishment. Time
and again judges in Illinois and Delaware repulsed Publicis’s attempts
to influence the vote on the Bozell deal by True North shareholders.
Yet had Levy been free to put his case to shareholders - his last appeal
to the courts was rejected the day before the deal won shareholder
approval - it seems likely that the trouncing would have been just as
Indeed, it was only the 18.4 per cent vote of Publicis - True North’s
largest shareholder - that opposed the deal at a brief meeting of
shareholders in Chicago on 30 December.
That vote set the scene for the creation of the world’s sixth-largest
global network, with billings of dollars 12 billion. True North
executives later claimed to have had the endorsement of 95.6 per cent of
the proxies delivered ahead of the meeting. It was, according to Bruce
Mason, True North’s chairman and an unlikely Duke of Wellington,
In his office overlooking the Arc de Triomphe in Paris, Levy must plot a
recovery that will give him the US presence needed if Publicis is to be
a serious global player. ’Maurice can’t be looking forward to a very
happy new year,’ a True North source chuckles.
For the moment, Levy is left with a festering resentment of a US legal
process he believes was weighted against him. ’We were muzzled by the
judicial system,’ he says. ’I can’t believe the country of free markets
can be so protectionist.’
Had he succeeded in his audacious gamble - ’more an emotional reaction
than a carefully thought-out plan,’ according to one former global
network chief - he would certainly have found the vehicle for his
vaulting international ambition.
Instead, he was forced to beat a hasty retreat, telling the US
Securities & Exchange Commission of his intention to withdraw Publicis’s
offer of dollars 28 for each of more than 9.6 million True North
Few doubt that this is a precursor to a complete disentanglement of the
financial stakes each company has in the other. True North insiders
indicate the group will shed the 26.5 per cent of Publicis shares it
owns if the price is right. Publicis, its stakeholding in the enlarged
True North diluted to about 10.5 per cent, will only retain its
boardroom seat beyond next spring in the unlikely event of it restoring
its stake to its pre-merger level.
Throughout the dispute with True North, Levy has insisted that Publicis
will have a global network within 12 months, irrespective of whether his
takeover bid succeeded. ’This isn’t really a setback and it doesn’t
change our plans,’ he says. ’It’s just a missed opportunity.’ However,
the process may be slower and more piecemeal than intended - and may
stretch the patience of major clients such as Nestle and L’Oreal the
longer a credible US presence is delayed.
Also, there is a risk of raids on Publicis business by those clients’
other roster networks. ’Levy’s time is running out,’ a US industry
Levy’s search for a solid US toehold will not have been helped by the
publicity surrounding the True North affair.
Moreover, the recent history of French forays into the US agency scene
gives little cause for optimism. Witness BDDP’s acquisition of the
overpriced New York shop, Wells Rich Greene, which promptly turned into
a millstone dragging BDDP into deep financial trouble.
’There always seems to be a natural antipathy in US agencies towards the
French,’ Richard Humphreys, the former Saatchi & Saatchi Worldwide and
N.W. Ayer boss, says. ’US agency people build their careers on their
clients, so it’s difficult for an outsider, particularly a foreign one,
to manage them.’
But the most intriguing question posed by the Publicis/True North spat
is whether hostile takeover bids will become as regular a feature of the
global advertising power game as in other industries.
’Never before has there been an ad industry fight like this, with a
couple of giants taking off the gloves and going eyeball to eyeball with
each other,’ a US industry observer points out. ’Advertising is now a
global business like any other.’
Nevertheless, other factors will continue to make hostile bids a risky
option. True North chiefs always maintained that a successful Publicis
takeover would have provoked many senior managers to resign. They also
say that the threat from S.
C. Johnson, the cleaning products manufacturer and one of FCB’s biggest
global clients, to rip out more than dollars 400 million worth of
business should Levy win control, may well have sealed his fate.
Meanwhile, as Levy ponders the lessons of a bruising encounter, even
True North insiders admit a sneaking admiration for his chutzpah. ’It
was a great attempt to steal a company,’ confides one. ’If he’d pulled
it off he’d have been hailed as the new Martin Sorrell.’