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[paris] Publicis President Maurice Levy last week announced the resolution of a bitter family feud that had threatened the agency's independence.

The nearly two-year battle between the daughters of the late Publicis founder Marcel Bleustein-Blanchet had posed a serious risk of destabilizing the holding company, Somarel, set up by Mr. Bleustein-Blanchet in 1970 to guard against takeover bids.

Somarel holds a 38% stake in Publicis and 47.8% of the voting rights.


After her father's death in April 1996, Michele Bleustein-Blanchet made it known she wanted to sell her 29.7% stake in Somarel, as well as her direct 8% share of Publicis. Her older sister, Elisabeth Badinter -- who presides over both Somarel's and Publicis' boards -- blocked the sale, citing Somarel rules prohibiting divestment by one member if others oppose it.

The feud has been in the courts since October, when Ms. Bleustein-Blanchet filed suit contesting what she claimed was her sister's and Somarel's stranglehold on her money. If the court had sided with Ms. Bleustein-Blanchet, it could have led to the breakup of the holding company.

The sisters separately contacted Mr. Levy in January -- after Publicis' failed hostile bid to take over True North Communications -- to ask him to sound out the other about finding a solution to their fight. Those discussions led to the resolution announced last week.

Under the agreement, Somarel shares owned by Ms. Bleustein-Blanchet and her nephew -- totaling 44.52% of the holding -- will be sold to a hand-picked pool of investors. A portion will go to Ms. Badinter -- whose stake in Somarel will rise to 40.8% -- while the remainder will be divided in two 18.6% blocks between institutional investors, and management and employees of Publicis.

Under a solidarity pact, rules will prevent sudden or massive sell-off of shares in Somarel. By 2003, the holding company will be merged into Publicis, which will continue to be chaired by Ms. Badinter.

As a condition of the agreement, the lawsuit was dropped.


"It's a beautiful solution, because it preserves Publicis' status as the only independently owned French advertising group," Mr. Levy said last week.

He would not immediately reveal details regarding the amount of the transactions, but indicated the overall sale on a per-share basis would be "lower than current market prices."

He also acknowledged that under a condition set by Mr. Bleustein-Blanchet's daughters in accepting the deal, Mr. Levy will personally buy 3% to 5% of the Somarel stock to be sold.

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