Omnicom completes share transfer

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Omnicom Group filed documents with the Securities & Exchange Commission last week completing its transfer of shares in New York-based and Razorfish, and San Francisco-based Organic to Seneca Investments LLC, the new e-services company that it jointly owns with Pegasus Partners II, a Greenwich, Conn., investment firm known for buying distressed properties.

Those documents, and an announcement early last week by that Seneca wanted to buy 100% of its shares, shed some light on what the Seneca structure will look like. As part of the transfer of shares of the interactive agenices, all equity of Communicade LLC, the unit that Omnicom formed to hold i-shop investments, was contributed to Seneca, and all Communicade employees, including CEO Michael Tierney, became employees of Seneca.

Omnicom officials declined comment. Seneca and Pegasus executives didn't return calls.

Seneca's intentions for are the most clear at this point. The company agreed to buy the stakes-totaling 20.4% of the company-of company founders Chan Suh, currently CEO, and Kyle Shannon, who holds the title chief people officer. Messrs. Suh and Shannon will sell their stakes in the company for an initial price of 94 cents a share and a potential second payment of 47 cents a share.

While the news raised inevitable questions about the duo's future with the company, one company insider said last week that one of the conditions of the arrangement was that they stay through 2006. Seneca made a bid for all other outstanding shares, totaling approximately 34.3%, at $3 a piece. A spokeswoman declined comment. The stock closed at $2.55 before the offer was announced; it closed at $2.54 May 18.

What the Seneca structure portends for's sibling public agencies-Organic and Razorfish-is less clear. Razorfish said it hadn't received a similar offer from Seneca.

Razorfish founder and Co-Chairman Jeff Dachis filed an "intent to sell restricted stock" stating his interest in selling 4.2 million shares. He declined to comment.

Also last week, Communicade filed a similar document stating its intent to sell its 12% stake in Razorfish. It was unclear if the sale was related to the transfer of all Communicade assets to Seneca.

Organic CEO Mark Kingdon said he couldn't comment on exactly what Organic's role will be with Seneca or if any deal similar to Agency's is in the works.

However, SEC documents indicate such an arrangement is possible for Organic, of which Seneca owns 17.3%. Seneca, in addition to saying it would explore options such as a merger or consolidation involving Organic, acknowledged in one SEC form that "Seneca is engaged in discussions initiated prior to its formal organization with other substantial shareholders regarding the possible increase in Seneca's beneficial ownership in [Organic]."

The principal shareholder in Organic, who has voting control of the company, is founder and Chairman Jonathan Nelson. He couldn't be reached for comment.

Another loose thread is what Seneca will do with its 15% stake in i-shop Red Sky obtained with the Communicade transfer. Red Sky experienced a management shakeup earlier this month when its chairman-CEO exited.

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