Publicis builds 3 entities to pursue U.S., Web goals

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[paris] France's Publicis Group, the world's 10th-largest advertising organization, has created one holding company to manage its global Internet operations, formed a second to coordinate its activities in the U.S. and announced an e-commerce partnership with consulting giants Cap Gemini Group and Ernst & Young.

The new Internet holding company, baptized Publicis Net, will pool Publicis' existing Internet activities into a single structure with the aim of listing it on the Nasdaq stock exchange within 18 months.

Publicis USA Holdings will link all of the French advertising giant's American activities, from the existing creative agencies of the Publicis Group to recent acquisitions such as Fallon McElligott, Minneapolis, marketing services company Frankel, Chicago, and media buying specialist DeWitt Media, New York.

The holding company will also take on Publicis' 10% stake in former ally True North Communications, valued at $200 million, which will likely be sold in the near future to serve as a war chest for acquisitions.

The e-commerce joint venture with Cap Gemini and Ernst & Young -- announced just weeks after the two consulting giants agreed to merge their information technology branches -- aims to offer European clients a full range of technological, financial and marketing Internet services.

PUBLICIS `AMERICAN YEAR'

Publicis Chairman Maurice Levy presented the three new developments as the core elements of a new strategy focused on developing operations in the American market and on the Internet. "This will be Publicis' American year, and it will be marked by a net acceleration onto the Internet," Mr. Levy said at a March 17 briefing on the group's 1999 final results (see For the Record on Page 74).

Internet-related revenue of about $50 million represents a relatively small share of the 1999 revenue total -- which hit $1 billion -- but Mr. Levy said that stands to double during 2000 and then double again, to $200 million, by yearend 2001 under the new Publicis Net holding.

Mr. Levy said that Publicis' new Internet division will meet these optimistic growth projections through the combination of new business linked to the boom in e-commerce and e-advertising and an aggressive acquisition campaign to be funded with up to $200 million in investment seed money.

The group also aims to "emerge in Japan this year" and reinforce its strong position in Latin America, Mr. Levy said.

Negotiations are nearing completion with an important local player in the Latin American market, while contacts are under way for both new business and new partnerships in Japan.

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