Generale des Eaux, started as a French water company, is transforming itself into a telecommunications group and wants to take control of Havas even though it doesn't consider advertising one of its future core businesses.
Havas owns 38% of Havas Advertising, the holding company for Euro RSCG and a second network, Campus Advertising.
BUILDING A MULTIMEDIA EMPIRE
Pierre Dauzier, Havas' longtime chairman, is expected to leave when a deal is done.
A GdeE spokesman acknowledged today's meeting between the two companies' boards to discuss "an eventual rapprochement of the two companies," but refused further comment.
GdeE is Havas's biggest shareholder, currently holding a 30% stake. The goal of its chairman, former banker Jean-Marc Messier, is to build a multimedia empire and become one of Europe's largest communications groups.
He's intent on restructuring Havas to focus on Canal Plus, a successful European pay TV network that recently entered the fledgling digital TV market, and other operations.
"It really wouldn't make sense to keep Havas Advertising," said a Paris stock analyst. Mr. Messier "is interested in building an empire around Canal Plus, multimedia and telecommunications -- what good will an advertising unit be to him in that?"
Last year, Mr. Messier engineered major personnel changes in Havas' management, divested Havas activities such as magazine publishing and restructured Havas into more sharply focused units.
DE POUZILHAC HAS OWN PLANS
Mr. Messier is expected to shed some of Havas' remaining diverse businesses, including advertising and a travel unit that American Express Co. is believed to be interested in buying.
Havas Advertising is seen as an attractive purchase by industry observers, with Grey Advertising, Leo Burnett Co. and WPP Group all rumored to be potential buyers. GdeE executives said they haven't begun to consider who might buy the unit.
EXPECTS U.S. PARTNER BY 1999
Havas upped its worth last week, putting out 1997 financials with a 37% increase in net profits over 1996, to $42.9 million. The company also reported a 17% increase in 1997 billings, to $558 million, and a 20% decrease in net debt to $117 million.
Havas Advertising Chairman Alain de Pouzilhac is said to be working to control the company's own destiny and searching for a partner of his own choosing.
He told Advertising Age last week he plans to rid Havas Advertising of debt and partner with a U.S. ad organization by the end of 1998.
Contributing: Laura Petrecca.