The transaction in question took place 10 years after Publicis andTrue North had formed a joint venture and strategic alliance callingfor the creation of a powerful global network. Neither side ever fullyagreed on long-term objectives or strategy, leading Publicis to unilaterally call off the alliance in 1997.
The French group merged Publicis Communication, a non-traded holdingthat formed the basis of its alliance with True North, into PublicisSA, which is listed on the Paris Bourse, or stock exchange, to grantits one-time American partner a liquid asset it could use to divestitself of the partnership.
As a result of the merger, True North received 8.8% of publicly tradedPublicis SA, against its 26.5% share in Publicis Communication. TrueNorth, which has since sold its holdings in Publicis, claimed that themerger inappropriately watered down its stake in the French company,and asked the arbitration court to award it $106 million in damages.
Publicis argued that the merger respected all relevant standards andregulations, conformed to prior contracts between the parties andcalled on the court to toss out True North's complaint, brought beforethe court in 1998.
While the court forced Publicis to disclose tax records and other fi-nancial materials to True North, it eventually supported Publicis' ver-sion of the dispute and dismissed the claim.
Publicis CEO Maurice Levy expressed pleasure at the court's ruling,noting that it was "thoroughly clear and definitive'' in its confirmation of Publicis' behavior. "I can only regret that the former management of True North thought it useful to undertake such a procedure,'' Mr. Levy says.
Publicis, the world's tenth-largest advertising group, holds a 10.6%stake in True North and remains the largest shareholder in the Americancompany, which is ranked seventh on the global rankings table. Mr. Levyhas regularly stated his intention to maintain Publicis' dormant stakein True North until the share price warrants its sale.
For its part, True North said in a statement that the decision "comesat the end of a long legal history with Publicis. We're glad to finallyput it behind us.''
While True North noted in its statement that the decision "has no affect on our operations or our financial performance,'' a Publicis insider said the American group would have been better served simply holding onto its shares, which have increased six-fold in value since being sold in 1999.
Copyright February 2000, Crain Communications Inc.