The street speaks

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Financial analysts and other industry observers gave a thumbs-up to the Publicis-Bcom3 deal. Most agree it appears fairly priced, but also warned the test will be how Publicis integrates its new acquisition.

"It probably works. It doesn't appear to be an excessive price," said Abe Jones, managing director of AdMedia Partners, a New York-based investment bank. He estimated the deal is worth about 1.5 times revenue and 13 times earnings before interest and taxes, par for recent agency acquisitions.

The price is fair and in line with what Interpublic Group of Cos. paid for True North Communications last year, said advertising analyst Lauren Rich Fine, first VP, Merrill Lynch & Co. Merrill has valued the deal at 10 times 2001 cash flow, also on par with other agency deals, she said. "For Dentsu," she added, "it achieves their goals as well-a nice stake in a bigger company."

Most observers agreed closing and integrating the Bcom3 acquisition will be a real test for Publicis Chairman-CEO Maurice Levy. This is especially true after the acquisition of Saatchi & Saatchi in 2000 and last year's move to place Zenith Media, a joint venture with Cordiant Communications Group, into a holding company with Publicis' Optimedia unit to create Zenith Optimedia Group, 75%-owned by Publicis.

"He's swallowed a lot of companies in a short period of time, but he's been able to line up the financing and to convince the market this is a smart deal. Judging by reaction to [the announcement day, March 7] increase in Publicis' price, they're buying it.," Mr. Jones said.

Publicis shares rose 12% on the Paris stock market and its American Depositary Receipt Shares rose 10.3% the day of the announcement.

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