Pending Havas announcement sparks rumors of Euro RSCG sale

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PARIS/DUESSELDORF -- Rumors surrounding a possible sale of Europe's largest ad agency, Euro RSCG, are circulating in the run up to a major share holding change at its parent company, Havas. Meetings slated for February 6 will seek to shuffle capital within the travel and communication giant Havas between two of its primary shareholders - communication and transport company Alcatel, and the water services company Generale des Eaux. The moves are designed to simultaneously consolidate Havas holdings in pay-TV station Canal Plus, and increase General des Eaux's stake in Havas while scaling Alcatel's down.

News of the possible exchange of shares has whipped up speculation that the sale of Euro RSCG - the main network in Havas Advertising - will be a part of the consolidation. Although Havas has spent millions to make Euro RSCG Europe's largest network and No. 7 in the world, some ad industry observers claim that the agency's profits have not met Havas' expectations.

Havas refuses to comment about what it calls "strictly rumor".

Even if such a huge sell-off were being sought, however, there are serious questions over whether it could be carried out. In the first place, few international ad groups have the resources necessary to finance such an enormous acquisition. BDDP, a French agency that ranks as the world's 15th biggest network, attracted the interest of several networks last year including Grey, before it was acquired by GGT.

And in a country where business and political interests often overlap, official resistance to seeing ownership of Euro RSCG pass to foreign hands will be great. "The political pressure to maintain the status quo is very high," an industry insider commented. "The question of who could buy Euro RSCG is complicated by the question of who would be considered an acceptable buyer. The options are very limited."

Euro RSCG's international clients include Procter & Gamble, Philips, Peugeot, L'Oreal, Intel and Danone.

Copyright February 1997, Crain Communications Inc.

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