Publicis votes no, but True North, BJK&E tie knot

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After nearly two months of loud public feuding and legal maneuvering, approval of True North Communications' acquisition of Bozell, Jacobs, Kenyon & Eckhardt came quickly and quietly.

In boilerplate fashion, 77% of True North shareholders on Dec. 30 voted to approve the deal during a 17-minute meeting in Chicago. The remaining 23% of the vote included a "no" vote from former joint venture partner Publicis SA, which lost a last-ditch appeal before the Delaware Supreme Court a day earlier.

Publicis Chairman Maurice Levy was not present at the meeting, but representatives of the French company voted its 18.4% stake in True North against the acquisition without comment.

Immediately after the shareholder meeting was adjourned, lawyers for True North and BJK&E moved to a nearby meeting room and completed the acquisition within a half-hour, creating the world's sixth-largest agency holding company.


True North CEO Bruce Mason, who retains his title, then announced the deal had been completed "with a day to spare." The initial agreement had a provision where either side could walk away if the acquisition was not completed by Dec. 31.

After a bitter public campaign that included lawsuits and countersuits, the meeting went on uneventfully, with no shareholders arguing for or against the deal. Most arguments had been precluded by a rapid-fire series of court decisions over the previous two weeks, which determined Publicis could not interfere with the closing of the deal, despite its objections that the deal was overpriced and would not help True North bolster its overseas business.


True North management predicted the combination will help True North double its revenue to $1.2 billion and will increase earnings by 10 cents per share starting in 1998.

True North with BJK&E will be a leader in media buying and interactive media, said Mr. Mason. The company plans to keep both the Bozell Worldwide and Temerlin McClain agency networks separate from True North's existing Foote, Cone & Belding network.

But it will merge media buying--now composed of TN Media and BJK&E Media--into a single operation. According to executives familiar with the plan, BJK&E President Michael Drexler will head up the merged unit.

The deal also bolsters hopes that the combined interactive units, Poppe Tyson Interactive and TN Technologies, will be spun off in an initial public offering. Each had tried public offerings before that were withdrawn when the market for tech stocks faltered.

Mr. Mason would not speculate on when the IPO could take place, but said prudent management would logically consider it, although the conditions of the BJK&E deal prevent True North from doing other significant transactions for a period of somewhere between six months to a year.

About 85% of True North's 25 million outstanding shares were included in the voting, the usual turnout for most of the company's shareholder votes, said Mitch Engel, president of True North's Diversified Communications Group. The 15% no-shows were due both to heavy trading in the company's stock after the Nov. 18 record date and to the holidays, he said.

Early in the legal maneuvers, Publicis had argued that True North had manipulated the record date to exclude investors who bought shares based on Publicis' rival bid to acquire a majority of True North at $28 per share. True North challenged that bid in court, arguing it violated the terms of the agreement ending their joint venture.


Publicis, which officially withdrew its tender offer Dec. 31, unsuccessfully challenged that provision before courts in Delaware and Chicago (see story below).

"Obviously, we are very disappointed, because we believe True North shareholders were prevented from considering our offer, which was significantly better than the merger with Bozell," said Mr. Levy in a statement. "Nevertheless, we will continue our worldwide expansion efforts, which have been extremely successful over the last two years."


It has been speculated Mr. Levy may try to sell his stake in True North after this defeat. With his stake diluted to less than 10% and the joint venture over, he may sell to fund other expansion plans.

Publicis' lone representative on the True North board, Ali Wambold, will serve out his term, but he is not expected to be reappointed.

Mr. Mason said he had sent a conciliatory note to Mr. Levy the morning of the shareholders' meeting. Personal differences between the two men had often been cited as a reason for the fireworks between their companies; both executives denied that.

BJK&E CEO Charles A. Peebler Jr.--now True North's president--said he did not doubt the deal would go through.

"For us this has always been what we considered the right deal with the right people for all the right reasons," he said.

The holding company's agencies have such major clients as Bozell's client Chrysler Corp. and S.C. Johnson & Son at FCB. Layoffs of from 200 to 300 employees are expected. Most of those are the result of the conflict with Mazda Motor of America, which FCB resigned; the majority of those have already taken place. The remaining layoffs are expected to be at the holding company level.

Mr. Mason would not estimate the cost of the six-week legal battle but said it was "probably a good investment." Looking ahead, he said the completed deal will put True North in a better position to carry out other acquisitions.

However, he said the company is not contemplating "anything major," except perhaps to acquire selected properties overseas on a country-by-country basis to round out its global operations.

Contributing: Laura Petrecca.

Copyright January 1998, Crain Communications Inc.

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