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.
