True North’s new row with Publicis

The bitter divorce of Publicis from its former US partner, True North, may be the subject of a new legal battle over claims by the Chicago-based network that it will be left dollars 30 million out of pocket by the final settlement.

The bitter divorce of Publicis from its former US partner, True

North, may be the subject of a new legal battle over claims by the

Chicago-based network that it will be left dollars 30 million out of

pocket by the final settlement.



True North this week intimated it might begin legal proceedings over the

deal, which would allow it to separate from the French group.



The latest row is over a proposed restructure by Publicis, permitting

True North to transform its non-publicly traded investment into publicly

traded shares (Campaign, 13 November).



Now True North, led by its chief executive, Bruce Mason, has calculated

that disposing its 8.8 per cent stake in Publicis would leave it with a

pre-tax loss of almost dollars 30 million in the fourth quarter of the

year.



A True North spokeswoman said: ’Our financial and legal people are going

over this transaction to make sure Publicis meets the obligations agreed

in our settlement of May last year. If it doesn’t we will have to look

at other possibilities.’



Matters may come to a head at a meeting of Publicis shareholders next

Friday when they will be asked to approve the issue of dollars 146

million worth of new shares.



A Publicis executive said: ’If True North is unhappy with the proposal,

it has the rights of all stockholders to vote its shares the way it

wants to.’



However, it is believed True North would be unable to sue successfully

over an investment that has turned out to be of lower value than

expected.



The threat of a return to the courtroom opens yet another chapter in the

most acrimonious inter-agency dispute in advertising history.



It stems from a cross-shareholdings agreement, which was established in

1988 as part of a global trading alliance between Publicis and True

North’s subsidiary, FCB.



Ill-feeling between the partners came into the open when Publicis

acquired the Bloom agency in New York, a move True North claimed

breached its alliance agreement.



It blew apart last year when Maurice Levy, the Publicis chairman, failed

in a hostile takeover bid for True North and mounted a series of hostile

lawsuits in an attempt to derail True North’s acquisition of the Bozell

network.



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