Publicis Said to Weigh Bid for Control of Cheil Worldwide

French Ad Giant Said to Be Considering a Tender Offer for 30% of Cheil Worldwide

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Maurice Levy, CEO of Publicis Group
Maurice Levy, CEO of Publicis Group Credit: Simon Dawson/Bloomberg

Publicis Groupe is weighing a bid for a controlling stake in Cheil Worldwide, people with knowledge of the matter said.

The French company is considering a tender offer for about a 30% share in Seoul-based Cheil Worldwide, which would make it the single largest shareholder, one of the people said. Any deal would probably see Samsung Group keep a significant holding in Cheil Worldwide, which has a market value of $1.9 billion, the person said, asking not to be identified as the information is private.

The deliberations are at an early stage, and Paris-based Publicis may decide against making an offer, the people said.

Publicis, which owns ad agencies including Leo Burnett and Saatchi & Saatchi, has struggled since a merger with Omnicom Group unraveled in May 2014. Last month, it lost most of the North American media business for Procter & Gamble Co., the world's largest advertiser, as well as L'Oreal SA's North American media planning and buying.

"Publicis has been distracted with acquisitions, while the main issue for them is defending and winning accounts," Alex Wisch, an analyst with Bloomberg Intelligence, said by phone Wednesday. "It's not the right timing or strategy at this stage."

Samsung business
The French company wants to structure the potential transaction to ensure Cheil Worldwide continues handling Samsung Group advertising, according to the people. Samsung Electronics, the maker of Galaxy smartphones, spent $2.3 billion on advertising globally in the nine months through September 2015, according to a regulatory filing, which didn't specify which agencies the expenditure benefited.

Samsung Electronics and engineering affiliate Samsung C&T Corp. own about 25% of Cheil Worldwide, according to data compiled by Bloomberg. Representatives for Publicis and Samsung Group declined to comment, while a spokeswoman for Cheil Worldwide said she's not aware of the issue.

In September, Samsung Group completed a merger of its de-facto holding company Cheil Industries and Samsung C&T, with the merged entity keeping the Samsung C&T name. The deal helped the founding Lee family cement control by allowing the group to strengthen its cross-ownership structure since the merged affiliates had stakes in other companies.

Publicis unveiled a new management structure in December designed to drive revenue. That followed the company's decision to cut its full-year sales forecast in October, saying it recorded no growth the month before as clients canceled and postponed campaigns.

Cheil has been in the news lately with many leadership changes. In December, Sophie Kelly of Cheil-owned The Barbarian Group stepped down from her role as CEO after two years. Her replacement is Peter Kim, the former chief digital officer at Cheil Worldwide.

-- Bloomberg News

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