Modem will continue to operate separately from Boston-based Digitas, which will give Digitas a second network. Plans call for merging Digitas' offices in San Francisco and London into Modem's operations. The two shops already share several key clients, including America Online, Delta Air Lines and General Motors Corp.
The deal, a stock swap worth approximately $200 million, is expected to close in the fourth quarter, pending regulatory and shareholder approval.
Interpublic Group of Cos. had owned a stake in Modem until last December, when it sold 11 million shares in a public offering that included shares from Modem's founders, G.M. O'Connell and Robert Allen. The sale was part of a divestiture of certain assets begun by Interpublic's chairman, David Bell, in an effort to reduce the company's debt load and clean up its balance sheet.
Modem Media, founded in 1987, over time absorbed various interactive holdings of True North Communications and its ad agency Bozell, giving True North a 51.1% ownership stake and 83.9% voting power when Modem went public in February 1999. Interpublic became Modem's largest shareholder when it bought True North in June 2001.