Publicis offers True North escape route via share issue deal

Publicis is bringing down the curtain on one of the bitterest agency disputes in world advertising history by allowing True North to end its financial involvement in the French group.

Publicis is bringing down the curtain on one of the bitterest

agency disputes in world advertising history by allowing True North to

end its financial involvement in the French group.



An escape route is being created through a restructuring of Publicis,

which will allow its former US partner to transform its non-publicly

traded investment into publicly traded shares.



The move is being made possible through the merger of Publicis

Communication, a non-public subsidiary in which True North has a 26.3

per cent stake, into the group.



If Publicis shareholders give the plan their backing on 11 December, the

group will issue $146 million worth of new shares. It will offer three

new shares in exchange for every two of Publicis Communication, a

holding company primarily for the group’s European activities.



The move was immediately welcomed by True North, which will end up with

a 8.8 per cent stake in Publicis. The company said it had been urging

Publicis to do it ’because it enables us to take the final step to

unwinding at the parent level’.



Publicis, True North’s largest shareholder, is undecided what to do with

its 10.6 per cent stake. Maurice Levy, the Publicis chairman, indicated

this week that the answer could be a share swap between the two: ’The

value of what True North would receive would be higher than the value of

the shares we have in True North.’



Levy said he was reluctant to dispose of True North shares while their

price remained disappointingly low. ’We’ve enough cash to do what we

wish so we may hang on to them and wait for better days,’ he added.



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