Profile of the Week: Bcom3 Group

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(Merger of Leo Group/MacManus Group)

Merger date: Jan. 31, 2000

What Leo paid for MacManus: $690.1 million ($1.12 billion reduced by $433.4 million compensation to redeem MacManus shares)

Outstanding equity: 15,386,359 Class A shares, 4,274,248 Class B shares

Shareholders: 660 (Class A shares)

Dentsu ownership: +21.7% (all Class B shares)

When Dentsu bought in : March 2000

What Dentsu paid: $494.5 million

While privately held Bcom3 Group is not yet part of the AdMarket 50, the company nonetheless gave the ad industry and investors a look at its financials. In March, Bcom3 announced it would not proceed with an initial public offering this year due to market conditions. As reported in the Chicago Tribune last week, the holding company of Leo Burnett Co. and D'Arcy Masius Benton & Bowles filed an annual report with the Securities and Exchange Commission that spells out its byzantine corporate structure and its deal with Japan's Dentsu.

The company is controlled by a voting trust of top management that wields voting power over 78.3% of the company's stock, owned by 660 employee shareholders. Bcom3 has approved an incentive plan that will give an additional 850 employees options to buy 950,000 shares of Class A stock at $130 per share.

Dentsu, which owns all outstanding Class B stock, is allowed to sell its 21.7% stake to institutional investors after March 14, 2002, if Bcom3 has not gone public by then. Dentsu also has a right to counter any acquisition offer from March 15, 2002, to March 14, 2005, if Bcom3 is not public.

Dentsu, Japan's largest agency, will have veto power over CEO appointments, major transactions and other extraordinary deals by Bcom3 as long as it retains a 15% stake or greater.

Pro forma results1 (millions of dollars):

2000 1999 Change

Revenue: $1,894 $1,722 10%

Net loss: (3.3)2 (23.4) N/A

(1) Assumes merger in Jan. 1, 1999

(2) Does not include merger-related charges. The 2000 loss including charges was $65.6 million

Percent of 2000 revenue from top 20 clients: 52.1%

2000 executive compensation:*

Roger Haupt (chairman-CEO) $2,215,942

Roy Bostock (executive consultant) $1,790,923

Richard Fizdale (executive consultant) $1,976,243

Craig D. Brown (president-chief operating officer) $1,546,961

Christian Kimball (chief administrative officer- chief legal officer) $711,476

*Includes salary, bonuses and other compensation

Source: Bcom3 Group

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