The nearly two-year battle had risked ripping asunder the family holding company, Somarel. The company, with a 37.98% stake (47.76% of voting rights) in Publicis, was set up by Bleustein-Blanchet in 1970 to safeguard takeover bids on Publicis. But upon her father's death in April 1996, Michele Bleustein-Blanchet made it known that she wanted to sell her 29.68% stake in Somarel, as well as her direct 7.96% share of Publicis. Her older sister, Elisabeth Badinter, who presides both Somarel and Publicis' board, blocked the sale by noting Somarel rules prohibiting divestment by one member if others oppose it.
The affair has been in the courts since last October, when Michele filed suit contesting what she claimed was her sister's and Somarel's stranglehold on her money. At worst, Publicis risked seeing the court side with Michele, which would open the way for the breakup of the holding fortress that had protected the company's independence. At best, a rejection would leave the structure intact, but also preserve the poisoned atmosphere and sense of shareholder division and instability.
Interestingly enough, however, it was Publicis' failed hostile takeover bid of True North late last year that gave birth to the resolution of the Somarel war. The unity generated by, and unanimous support given to, Mr. Levy in the effort to acquire True North led both sisters to contact him separately in January. Each sister asked Mr. Levy to sound out the other on the notion of allowing Mr. Levy to explore possible solutions to the internal battle. It was the result of that mediation that Mr. Levy announced today.
Under the agreement revealed Thursday, Somarel shares owned by Ms. Bleustein-Blanchet and her nephew--totaling 44.52% of the holding company-will be sold and distributed to a hand-picked and reliable pool of investors. A portion will go to Ms. Badinter, whose stake in Somarel will rise to 40.78%, while the remainder will be divided in two 18.55% blocks between institutional investors, and management and employees of Publicis. Under a solidarity pact that will be signed by all holders, rules will prevent sudden or massive sell off of shares in Somarel. Once the stability of Somarel ownership has been established by 2003, the holding will be merged into Publicis, which will continue to be chaired under terms of the pact by Ms. Badinter.
"It's a beautiful solution because it preserves Publicis status as the only independently owned French advertising group," Mr. Levy commented shortly after briefing what he called "enthusiastic" Publicis personnel. "Everyone involved is pleased with the solution, and the opportunities it provides."
Mr. Levy would not immediately reveal details regarding the amount of transactions, but he did indicate that the overall sale on a pershare basis would be "lower than current market prices". He also acknowledged that under a condition set out by Mr. Bleustein-Blanchet's daughters in accepting the deal, Mr. Levy would personally be buying between 3% and 5% of the Somarel stock to be sold. Though he said he was ready to purchase the "maximum amount" stipulated under the condition, he noted that enough would be left open to other Publicis staff, which abides by the plan's ideal of allowing "all employees-from messengers to the president--to become shareholders in the agency."
Copyright April 1998, Crain Communications Inc.