3 years after merger: Did True North pick best partner in IPG?

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Three grueling years have passed since True North Communications weighed buyout offers from three suitors and bet on Interpublic Group of Cos. "Interpublic and True North combine to create world's largest marketing communications and services group," trumpeted the press release on March 19, 2001. "Transaction valued at $2.1 billion."

Since True North's board approved the deal, Interpublic stock has fallen 55%. That puts this deal in bad company: Time Warner, the product of a failed 2001 merger with America Online, has seen its stock crash 56% during the same period.

Omnicom keeps its value

Over the past three years, shares in another bidder, Havas, fell 60%. The third bidder did better: Category leader Omnicom is down less than 1%.

Interpublic stock that True North investors received is worth just $940 million. Interpublic, following weak performance and asset sales, now ranks No. 3 in revenue, behind Omnicom Group and WPP Group.

Interpublic's offer was worth slightly more than rival bids when True North Chairman David Bell and his board approved the deal. By the time the sale closed in June 2001, Interpublic shares had fallen to put a final price on True North of just $1.63 billion-more than $400 million below the transaction's original value and below offers from Omnicom and Havas. It was Interpublic's last big deal.

Interpublic's stock tanked in 2002 amid disclosures of accounting errors, operating troubles and other woes. Mr. Bell stepped in as chairman-CEO in February 2003. In an interview last week, Mr. Bell defended True North's decision to sell to Interpublic. "We thought that the assets here [at Interpublic] were the place we wanted to be, and we still feel that way."

contributing: claire atkinson

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