Y&R RECAPITALIZES TO BUY OUT GROUP OF RETIRING WORKERS

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Young & Rubicam recently completed a recapitalization with the primary purpose of buying out a group of retiring shareholders, including former Chairman Alex Kroll. Privately held Y&R won't discuss its ownership structure or financial dealings, but periodic recapitalizations by large companies aren't all that unusual.

EMPLOYEE OWNED

Y&R is 100%-owned by employees, with longtime senior managers holding in some cases relatively large stakes. When such shareholders are ready to cash out, there aren't always enough other shareholders willing to buy their stakes. In those cases, a company has to buy out the shares and may need to raise money to do so.

A Y&R executive dismissed speculation the agency is considering an initial public offering or a sale to a corporate owner. Industry observers agreed an IPO would run against Y&R's corporate culture.

CONSOLIDATION PLANS

Separately, Y&R insiders, as well as real estate executives, said the company would like to consolidate its various New York offices. Y&R owns its headquarters, but subsidiaries-including Burson-Marsteller, Wunderman Cato Johnson and Sudler & Hennessey-are spread among four or five buildings in the city.

Contributing: Pat Sloan.

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