Potential buyers -- a group led by the Big 3 of Omnicom Group, Interpublic Group of Cos. and WPP Group -- have been asked by the investment bank exploring a sale of the world's 11th-largest advertising company to provide "indications of price" this week.
Officials at the holding companies declined comment, but all three are believed to have an interest in Snyder and were said to be looking over financial information on the company.
One executive who had been contacted said he wouldn't rule out a $2 billion price on the deal but added, "It's a big bite."
Snyder, parent of ad agency Arnold Communications and direct marketing powerhouse Brann Worldwide, saw its stock price jump last week to around $20 a share -- double October's all-time low -- as word spread that it had hired BT Alex. Brown, a unit of Deutsche Bank, to explore strategic options, including a sale.
Snyder Chief Financial Officer Clayton Perfall said the move was designed to maximize shareholder value. While Snyder's stock languished in the teens, competitors such as Interpublic, WPP and Omnicom have seen their stock prices sail past $58, $80 and $105 a share, respectively, in recent months.
A Snyder spokesman said the Bethesda, Md., company hired BT Alex. Brown after receiving an undisclosed purchase offer. One Snyder official who asked not to be named said the per-share offer was in the mid-to-high $20s. But at least one potential buyer was skeptical that Snyder had received an offer, saying he believes word of the potential sale was leaked to boost the stock price prior to a deal. The stock closed at $18.56 on Dec. 29.
$1.8 BILLION MARKET VALUE
Analysts said they considered a fair price to be about $25 a share, which would give the company a market value of $1.8 billion. The Snyder board, however, may be unwilling to accept such an offer considering its members "recall when the stock price was well above $40," in February 1999, said one analyst.
Because of its high-flying stock price early last year, industry observers had seen Snyder as a rising star in the ad business and a likely buyer of more agencies. But Snyder's stock began to sink, and company Chairman-CEO Dan Snyder's attention appeared to be diverted to other pursuits, including an acquisition of the National Football League's Washington Redskins.
"I think he's lost interest in the business," said one rival executive.
Mr. Snyder, who holds about 9.5 million shares in the company, stands to reap about $237.5 million in a sale. His sister, Michelle Snyder, owns about 4 million shares; the president-chief operating officer would get about $100 million.
One of Snyder's most attractive selling points is Brann, Deerfield, Ill., and Cirencester, U.K., its direct marketing arm and the country's ninth-largest agency brand, with clients such as SBC Communications and Bank of America. Billings in 1998 were $1.9 billion, and gross income was $287.6 million.
ARNOLD IS KEY UNIT
Another feather for any buyer would be Boston-based Arnold Communications, the 28th-largest agency brand with $117 million in gross income in 1998 and clients that include American Legacy Foundation's anti-smoking campaign, Ocean Spray Cranberries, Royal Caribbean International and Volkswagen of America
Ventiv Health, formerly Snyder Health Care, will not be part of any deal; Snyder spun off the Somerset, N.J., division in September. Snyder's 20% stake in publicly held Circle.com, a new-media company, is included in the sale.
The Snyder spokesman said the company hired Deutsche Bank because the world's largest bank has an office in nearby Baltimore and already is knowledgeable about the company, having spun off Circle.com.
Contributing: Laura Petrecca, Beth Snyder