True North unit, Modem link

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The stock of True North Communications closed unchanged at 23 3/8 on Thursday after the announcement that True North's TN Technologies unit will merge with Modem Media, Westport, Conn., in a stock deal valued at $29 million. True North will file for an initial public offering for the combined Modem Media-TN Technologies.

The deal brings together two well-known names in the agency interactive business. Modem, founded in 1987, is one of the oldest shops, while TN started up in December 1994 as a joint venture of True North's technology group and R/GA Digital Media, a New York special effects house.

Modem will retain its name and become a unit of TN Technologies. Greg Blaine, chairman-CEO of TN Technologies, will keep his title with the combined company. G.M. O'Connell, founder and partner in Modem Media, will be president-chief operating officer. Modem's two other partners, Robert Allen and Doug Ahlers, will serve as president of Modem Media and president of TN Technologies' Relationship Technology Group, respectively.

Modem will receive $25 million in True North common stock at the closing of the deal, expected in November. It will receive an additional $4 million upon completion of the IPO. Modem will retain a substantial minority interest in the new combined company.

Modem brought big concerns to the negotiating table about being gobbled up by a large company. The structure of the merger indicates that it pushed--successfully--for a high degree of independence.

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