Kitcatt Nohr Alexander Shaw founders win Publicis Groupe case

The founders of Kitcatt Nohr Alexander Shaw have won their case against Publicis Groupe's MMS subsidiary over their 2011 merger with Digitas, in a decision that could cost the French advertising giant up to £5m.

Mishon, Kitcatt, Alexander and Nohr (l-r)
Mishon, Kitcatt, Alexander and Nohr (l-r)

This morning the High Court judge Mr Justice Males ruled in the Kitcatt Nohr Alexander Shaw’s founders’ favour on both counts.

He awarded the claimants £2.6m – although that was less than the £3.6m they wanted. The judge is yet to rule on costs, which could add another £2m to Publicis Groupe’s bill.

The claimants included the co-founders Paul Kitcatt, Marc Nohr, Vonnie Alexander and the estate of Jeremy Shaw, who died last year, as well as eight members of Kitcatt Nohr Alexander Shaw's management team and Clive Mishon, a founding investor and non-executive of the agency. 

Kitcatt said: "This judgement proves the key players at Digitas knew the Publicis ad agencies [including Saatchi & Saatchi and Leo Burnett] – the ‘frenemies within’ – planned to take business away from Kitcatt Nohr Digitas.

"It proves that when it happened we had to spend months thrashing out a new deal. It proves they then pretended there was no deal, and pretended again they knew nothing about the ad agencies’ plans. It proves they owed us money they tried to deny us. They made us fight for it every inch of the way.

"They didn’t honour their agreements, and Maurice Lévy [the chief executive of Publicis Groupe] didn’t come and face us to defend his honour.

"Instead he relied on a string of witnesses who lacked credibility. They argued about fine technicalities to try to reduce their debt to us."

In the ruling published today, Males found that MMS breached the buyer warranty over its 2011 purchase of Kitcatt Nohr Alexander Shaw.

The claimants argued that Publicis Groupe had not been clear about the strength of Digitas’ relationship with its major client Procter & Gamble.

In his ruling, Males found it could have been "reasonably expected" that work from Digitas would move to its ad agencies or brand agency leaders, as they were known.

He said: "I have no doubt that it could reasonably be expected at the date of the [share sale and purchase agreement] that the [brand agency leaders’] new strategy of retaining Proctor & Gamble work for themselves and cutting out Digitas UK or Kitcatt Nohr Digitas would cause a reduction of at least the specified percentages of operating income and revenue during 2012 and 2013 compared with what was otherwise expected."

Males also agreed with the claimants that the parties reached a legally-binding agreement in December 2012.

He awarded the claimants £2.6m in line with the 2012 settlement – which supersedes the earlier deal. The claimants argue the figure should be £3.6m and plan to appeal.

The discrepancy relates to the treatment of IT fees charged by Publicis’ internal Shared Service Centre.

Kitcatt said: "It could all have been so different. Publicis depends on absorbing new creative agencies into its network.

"They need the new blood to keep their network alive. Yet they show no creativity in their business practices. If they had come clean at first about the threat from the ad agencies, we could have defended the business.

"If they had cut a new deal quickly and stuck to it, we could have focused on winning new business, not on endless finicky negotiations with shadowy figures in Paris.

"And if, all else having failed, they had made us a decent, honourable offer to settle this case, we would not have endured months of legal arguments, and a great deal of expense."

None of the claimants still work at Kitcatt Nohr, as the agency is currently known. It is in the process of merging into DigitasLBi – alongside Chemistry – to create a dedicated Publicis Communications CRM division.

A spokeswoman for Publicis Groupe had not responded to a request for comment by the time of publication.