True North closes Bozell deal

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by Mercedes M. Cardona

True North Communications closed its heavily contested acquisition of Bozell, Jacobs, Kenyon & Eckhardt Dec. 30 in an overwhelming-if anticlimactic-shareholder vote to approve the deal.

At a special shareholder meeting in Chicago, 77% of 21 million shares voting approved the deal. The remaining 23% of the vote included a no vote from former partner Publicis Communication, which lost a last-ditch appeal to the Delaware Supreme Court Dec. 29. 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. Immediately after the 17-minute meeting was adjourned, lawyers for True North and BJK&E adjourned to a nearby meeting room and completed the acquisition within a half-hour. True North CEO Bruce Mason -- who retains his title in the company -- announced the deal had been completed "with a day to spare."

The initial agreement had a provision under which either side could walk away from the acquisition if it was not completed by Dec. 31. After a bitter public campaign that included suits and countersuits, the meeting went on uneventfully, with no shareholders arguing for or against the deal. Most arguments had been precluded by court decisions over the last two weeks which ruled Publicis could not interfere with the closing of the deal, despite its objections that it was overpriced and would not help True North's need to bolster its overseas business. True North management begged to differ, predicting the combination will help True North double its revenues to $1.2 billion annually and will increase earnings by 10 cents per share starting in 1998. The combined True North-BJK&E company will be the sixth-largest agency holding company in the world and will be a leader in media buying and interactive media, said Mr. Mason.

Approximately 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 are due both to the holidays and to heavy trading in the company's stock after the Nov. 18 record date. Early in the legal maneuvers, Publicis had argued that True North had manipulated the record date to exclude investors who bought shares anticipating Publicis would succeed in a rival bid to acquire a majority of True North at $28 per share and merge the two.

"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. Nevertheless, we will continue our worldwide expansion efforts, which have been extremely successful over the last two years," said Mr. Levy, in a statement. Publicis officials would not comment beyond that, but it has been speculated that Mr. Levy may try to sell his stake in True North after this defeat. With his holding diluted to less than 10% and the joint venture over, he may sell his stake to fund other expansion plans. Publicis' lone representative on the board, Ali Wahmbold, will serve out his term until the next shareholder meeting in May, but he is not expected to be reappointed for another yearlong term.

Mr. Mason said he had sent a conciliatory note to Mr. Levy that morning. "The first line was `Maurice, I want you to know I didn't take it personally. It's only business,' " said Mr. Mason.

Looking ahead, Mr. Mason said the completed deal will put True North in a better position to carry out other acquisitions, but said the company is not contemplating "anything major" except perhaps acquiring selected properties overseas on a country-by-country basis to round out its global operations.

The deal also bolsters hopes that the combined interactive units, Poppe Tyson Interactive and True North Technologies, will be spun off in an initial public offering. Both had attempted public offerings before and withdrew them 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 any other significant transactions for six months to a year.

Copyright December 1997, Crain Communications Inc.

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