Publicis unveils pitch to merge with True North

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In an apparent bid to derail True North Communications' combination with Bozell, Jacobs, Kenyon & Eckhardt, French ad agency Publicis revealed today it has offered to combine with True North through either a merger or an acquisition. According to documents released by Publicis, the move was triggered by True North's plan to purchase BJK&E, a step Publicis said it formally opposes as the largest holder of True North common stock. It owns 18.5% True North's common.

True North rebuffed the Publicis proposal in a letter released this afternoon.

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Earlier today, Paris-based Publicis released a Nov. 10 letter from Publicis President Maurice Levy to True North's board proposing the merger of the two groups as "a strategically perfect fit" and in "the best interests of both True North's and Publicis' stockholders, and their respective clients and employees." Mr. Levy's letter claimed that BJK&E had a "weak international presence" and would compound True North's weaknesses. Apart from suggesting the global merger, however, the document is virtually empty of operational details and only deals with financing and ownership by hinting at a possible buyout of True North stock valued at $28 per share. That price is about 30% higher than BJK&E is said to have valued True North stock in negotiating its planned buyout.

The disclosure is a complete reversal of the line Publicis had held since it announced in February 1996 that it could not settle differences with True North in their partnership and had agreed with the Americans to separate their businesses and clients and divest cross holdings.

In addition to Publicis' stake in its former partner, True North also holds 26% in Publicis' holding company, Publicis Communications.

Also Monday, True North disclosed it had filed suit against Publicis Communications in Delaware Chancery Court to compel the French company to provide "historical financial documentation" needed for True North's BJK&E acquisition to go forward.

In its Monday afternoon response to Publicis, in the form of a letter to Mr. Levy signed by True North Chairman-CEO Bruce Mason and Rick Braddock, True North's non-executive chairman and an outside director, the two executives reaffirmed True North's intent to pursue the BJK&E merger.

The letter said the True North board met Nov. 12 and "unanimously (with Ali Wambold, your Publicis designee, recusing himself, and [outside director] Mike Murphy] absent) resolved to decline your invitation to meet to discuss the transaction which you are prepared to propose."

"The board," the letter added, "believes it is unrealistic to ignore a decade of difficulties between our two companies, which (if they were to persist) would directly and adversely affect the value of any combination you propose, and further believes any such combination could cause significant fallout of key clients and key employees."

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