TRUE NORTH-BJK&E NUPTIALS EXPECTED TO SURVIVE NEW BID: PUBLICIS' OFFER CONSIDERED TOO VAGUE TO STOP AGENCY MERGER

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The appearance of Publicis as a last-minute spoiler has executives at True North Communications and Bozell, Jacobs, Kenyon & Eckhardt bracing themselves for a bumpy ride to the altar.

Industry observers, however, said the Publicis proposal last week to buy True North is currently too vague to be taken seriously.

SEC APPROVAL EXPECTED

True North expects the Securities & Exchange Commission to approve this week its proxy statement sketching out its BJK&E stock swap, worth some $440 million, leaving the company free to hold a vote on that acquisition in 20 business days.

"We're still committed to having the shareholder vote before the end of the year," said True North Chairman-CEO Bruce Mason. True North filed an injunction Nov. 17 to force Publicis to submit the last information needed by the SEC for the proxy application; Publicis complied the next day.

On Nov. 10, Publicis Chairman Maurice Levy released a letter containing a $28-per-share pro-posal to acquire True North, but insiders immediately said it was too little, too late. In fact, the language of the letter stopped just short of an actual offer (for full text of correspondence between Publicis and True North, visit http://adage.com).

True North officials privately admit they probably have not heard the last of Mr. Levy's public pronouncements. But dragging True North back to the altar with Publicis against its will would require a substantial dowry, which Mr. Levy may not be ready to pay.

PROHIBITIVE OBSTACLES

Observers said any offer would have to clear an obstacle course of poison-pill defenses, acquisition premiums and stock pricing considerations that would likely be prohibitive -- $35 per share was the estimated price needed to compel the True North board to consider an offer.

But if Mr. Levy were to come back with a solid offer at a substantially higher price than $28, insiders said there are True North executives who would pressure the board to consider it.

Given the acrimonious history of the defunct partnership between True North and Publicis, the last-minute move appeared as strange as it did desperate. The two groups' February 1996 divorce -- finalized in June -- ended what had been a dysfunctional relationship.

"Given last summer's divorce decree, not only do I find it amusing that Maurice wants to get married again, it strains credibility," Mr. Mason said.

ATTEMPT TO THWART MERGER?

The offer appears to be "a thinly veiled attempt to postpone or thwart the BJK&E merger," according to a report by analyst Susan Decker of Donaldson, Lufkin & Jenrette, San Francisco.

The BJK&E acquisition would dilute Publicis' remaining stake in True North, affecting how it states its True North earnings on its balance sheet and hitting its bottom line. BJK&E shareholders will get about 40% of the post-deal company, reducing Publicis' stake from 18.5% to less than 12%. True North senior management and the company's employee stock ownership plan own more than 20% of shares.

SPECULATION OF GREENMAIL

Some agency insiders speculate Mr. Levy is performing a form of greenmail, a practice through which 1980s corporate raiders bought a company's stock and then threatened takeover until their shares were bought back at a higher price. And industry observers note Mr. Levy has another uneasy partnership to deal with: that with the daughters of the late Publicis founder Marcel Bleustein-Blanchet, at least one of whom could be bought out with proceeds from the sale of its True North stake.

The BJK&E deal will most likely get done thanks to the momentum it has already gathered and support from financial analysts and investors, who feel it will have a positive effect on the company, said Abe Jones, managing director at investment banker AdMedia Partners, New York.

Although criticized by some as expensive, the deal gives True North the second agency network it needs to be a viable holding company. If it fails, observers say True North could be a takeover target.

Publicis said it would vote its shares against the BJK&E deal, claiming it leaves True North still weak internationally.

'IT'S A BAD DEAL'

"It's a bad deal," Mr. Levy said, "This is not about bitterness or anger. It's driven by business concerns."

Mr. Levy remains undaunted by True North's quick and categorical rejection.

"It was rapid, but lacked conviction, which leads us to believe we can still come to a strategically sound and amicable arrangement," he said.

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