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Public spats among influential shareholders have never particularly warmed the hearts of company management. For Publicis President Maurice Levy, however, the acrimonious struggle currently being waged between two investors is more agonizing than most.

That's because it involves the two daughters of agency founder Marcel Bleustein-Blanchet, who died in April 1996.

"For someone so attentive to brand image and dignity, this must be awful for Maurice Levy," said one French ad industry executive familiar with the struggle. "It's ironic, too, because Marcel Bleustein-Blanchet guarded as carefully over Publicis' independence as he did its development. This whole fight really broke out in the center of the structure he created to ensure family control of the agency and protect its independence. I'm sure this was the last place he could have imagined instability would arise."

Mr. Levy and other Publicis executives were unavailable for comment.


Neither management security nor agency independence is endangered by the Bleustein-Blanchet family quarrel. It does, however, risk allowing a sizable chunk of the family stake to be put up for grabs-and possibly purchased by investors not interested in the agency's continuing independence.

The seeds of the conflict were sown shortly after Mr. Bleustein-Blanchet's death, when his older daughter, Elisabeth Badinter-an author, academic and wife of a former French minister of justice-succeeded her father as president of Publicis' steering committee.

Around that time, younger daughter Michele Bleustein-Blanchet said she was considering selling her stake.

Over the following year, Ms. Bleustein-Blanchet began preparing for an eventual sale, even as her sister assumed the role of protector of their father's empire.

The point of no return was reportedly passed June 30, when the two sisters met with other owners of the familial Somarel holding company, which Mr. Bleustein-Blanchet founded in 1970, to regroup their collective 38.2% of Publicis shares. That stake-held by five family members-is by far the largest block of Publicis stock.

It was during this meeting Ms. Badinter proposed buying her sister's shares, based either on a mutually accepted price or one determined by an independent financial expert. Ms. Bleu


Blanchet, how

ever, turned the deal down, apparently convinced no mutually acceptable evaluation could be made in the few hours before the end of the meeting, the deadline Ms. Badinter had presented her with.


There is also speculation she was wary of having to sell her stake at the price determined by an independent expert, who might evaluate it under terms of the Somarel shareholding arrangement, rather than as indirect stakes in Publicis. That difference could lower the estimated worth.

Instead, Ms. Bleustein-Blanchet, 51, seems intent on taking her sister to court with the view of having Somarel dissolved on legal grounds so her shares can be converted into direct stakes in Publicis. Individuals familiar with the quarrel believe she will file suit in the fall. If she succeeds, she'll find herself holding nearly 8% of Europe's second-largest network-worth between $116 million and $150 million-and free to sell to whomever she wishes.

If she fails, however, she'll be trapped in the family holdings, with shares too valuable to sell at their evaluated price.


"Two solutions I see are [either] that Maurice Levy finds partners to buy the shares at an acceptable price before Michele can take her case to court," said the French ad industry executive. "Otherwise, Mrs. Badinter finds a partner in advertising or a related business to buy the shares at quoted Publicis share prices. The problem here is that I see no natural, friendly partner with that kind of money to spend."

Because pride, willfulness and family ties may play as large a role in the drama as finance, it's impossible to know how it will ultimately play out. If it continues as it has, Ms. Bleustein-Blanchet may wind up distinguishing her father's ambitions from her own by-in the recent words of a Publicis official-"selling to whomever is ready to pay her price."

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