IPG May Sell NFO WorldGroup

Acquired Research Firm in 2000 for $500 Million

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Interpublic Group of Cos. is recruiting investment bank Goldman Sachs to sell NFO WorldGroup less than three years after it bought the giant market-research venture for nearly $500 million, according to an executive familiar with the situation.

The sale, unwinding one of its biggest acquisitions to date, would come as Interpublic works to cut debt and bring order to its unwieldy group of companies.

NFO referred calls to Interpublic. John J. Dooner Jr., Interpublic chairman-CEO, declined to comment, as did Goldman Sachs, which advised Interpublic on the 2001 acquisition of True North Communications. Interpublic has said in Securities and Exchange Commission filings that it may need to sell "certain non-core assets" to raise cash.

Race tracks
Wall Street analysts and ad industry executives expect Interpublic to jettison the racetracks it bought in 1999 in an ill-fated expansion of its sports-marketing holdings. Interpublic last month said it is assessing "strategic alternatives" for racing venture Octagon Motorsports. But a sale of NFO, one of Interpublic's strong performers, would indicate Interpublic is looking beyond that troubled venture.

Mr. Dooner labored this year with financial restatements, poor business performance and questions about his future. Acquisitions have saddled Interpublic with $2.9 billion in debt, which ratings services have downgraded to one step above junk over concerns about 2003 liquidity.

Exec VP-Chief Financial Officer Sean Orr said this month that he and Mr. Dooner have "a sacred commitment" to keep an investment-grade rating on debt and a corporate priority to reduce debt and "focus the portfolio."

Serial seller?
That could turn a serial buyer into a serious seller. One indication: Long-acquisitive Interpublic added the possibility of asset "dispositions" to a boilerplate "cautionary statement" in regulatory filings this month.

"Clearly, Interpublic needs to firm up the balance sheet to keep investors happy. They need to do whatever they can," said David Doft, advertising analyst at CIBC World Markets.

NFO, with 15,000 employees in 40 countries, is billed as the largest custom market-research organization in North America and third-largest in the world. Interpublic doesn't disclose NFO revenue.

NFO attracted multiple bids before Interpublic closed a deal in April 2000, near the stock-market peak. Interpublic paid $493 million in stock-61 times NFO's average earnings for the previous five years. Interpublic also took on $180 million in debt.

NFO price
Observers said NFO-likely to sell at a price far below what Interpublic paid-could be a good fit for such companies as Aegis Group, Ipsos Group, Taylor Nelson Sofres, United Business Media or VNU, which have stakes in market research; agency rival WPP Group; or a buyout firm such as Hellman & Friedman.

Hellman & Friedman and Ipsos declined to comment. The other companies didn't respond to calls or e-mails.

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Mercedes M. Cardona and Jack Neff contributed to this report.

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