NEW YORK (AdAge.com) -- Interpublic Group of Cos. announced it has reached a settlement of a series of shareholder lawsuits filed last year after the stock tanked in the wake of a series of earnings restatements.
Interpublic will pay $20 million in cash and $95 million in stock worth $14.50 per share to participants of a class action suit pending in federal district court in New York.
Judge Grants Class Action Status to IPG Lawsuit
Move Could Raise Financial Impact for Holding Company
IPG Restructuring Charges Higher Than Predicted
CEO Tells Analysts That Reorganization Process Is 'Messy'
Lawsuit Alleges 'Accounting Manipulations' at Interpublic
Current and Former Top Executives Named as Defendants
Former True North Shareholders Sue Interpublic
Allege They Were Misled on Financial Details
Pending court approval
The agreement, subject to approval by the court, also provides for an additional stock or cash payment if Interpublic's stock drops below $8.70 a share before the deal is completed.
Last month Judge Denise Cote for the U.S. District Court, Southern District of New York, granted class action status to plaintiffs suing Interpublic and several of its former and current executives. Legal experts had said the decision could raise the financial stakes facing the holding company.
Following the judge's ruling, Interpublic, parent of ad networks McCann-Erickson Worldwide and Foote, Cone & Belding Worldwide, reported a net loss of $327.1 million, or 85 cents a share, for the third quarter, vs. a loss of $89.6 million, or 24 cents a share, for the year ago period. The losses include a charge of $127.6 million to cover the potential cost of settling the pending legal actions.