Delaware court derails Publicis bid for True North

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A Delaware Court of Chancery judge Dec. 23 delivered what could be the death blow to Publicis Communications' hopes of launching an 11th hour tender offer for control of True North Communications.

Chancellor William Chandler III ruled that Publicis, in launching the tender offer, violated a contract it had signed with True North. He issued a preliminary injunction barring Publicis from going ahead.The decision could be appealed to the Delaware Supreme Court. True North and Publicis attorneys in Delaware had no immediate comment.

The judge said the contract Publicis signed earlier this year, dissolving its failed joint venture with True North, required Publicis to support True North's purchases of ad agencies though Publicis could vote its own shares against the deal. Publicis owns 18.5% of True North's common stock.

Quoting language in the agreement that said Publicis must take action ``in support of the transaction,'' the judge said he could see no reason why Publicis could mount a tender offer.

``Without listing every action that [support] might require a party to affirmatively undertake, it is a term ordinarily understood in the English language as incompatible with the launching of a hostile tender offer conditioned on abandonment or destruction of the very transaction that Publicis is obligated to assist,'' the judge said.

``Publicis is contractually bound to support True North's acquisitions, not undermine them by launching a hostile tender offer,'' the judge said.

True North had sought an injunction to allow it to go ahead with its Dec. 30 shareholders vote on its plan to acquire Bozell, Jacobs, Kenyon & Eckhardt. Publicis has contended its plan to acquire control of True North is a better deal for True North shareholders.

While the Delaware court action appears to stop the tender offer, a U.S. District judge in Chicago is expected to rule Dec. 24 on other aspects of the dispute. It was unclear how the Delaware decision might affect the federal court ruling.

Copyright December 1997, Crain Communications Inc.

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