Envoy Communications and Leagas Delaney have returned to the
negotiating table following a downturn of the latter's Silicon Valley
In late February, Leagas Delaney San Francisco laid off 40 of its 82
staffers in response to deep cuts in ad spending by its primarily dotcom
Geoff Genovese, Envoy's president, said the plummeting fortunes of the
San Francisco office haven't changed his view that Leagas Delaney is an
attractive acquisition target. 'But we obviously want to be sure we're
paying a fair price,' he said.
Last November, the Toronto-based Envoy agreed to purchase Leagas Delaney
for CDNdollars 132 million. The closing was set for the end of January
but it was rescheduled until 31 March to allow the two parties time to
work out tax and financing issues.
Bruce Haines, chairman of Leagas Delaney, said the tech meltdown has
also affected the agency's interactive division, Digital Partners, which
laid off six of its 26 employees last week.
The price of Envoy's stock will also be a topic of discussion in the
negotiations. According to the original deal, Envoy was to make up part
of the price in company shares valued at CDNdollars 8. But Envoy's
shares have dropped to as low as CDNdollars 3.40 in recent trading.
Envoy would now need to pay out more than double the number of shares it
Genovese said this wouldn't make sense as he believes the company's
share price will recover when the stock market recovers.
Haines agreed with Genovese, adding that the two parties were looking at
ways to restructure the deal.