(MarketingClick/Reuters) French advertising group Publicis SA no longer intends to oppose Interpublic Group of Cos. Inc.'s bid for True North Communications Inc., which it dismissed earlier as "peanuts," according to a local newspaper report.
In an interview with financial weekly Le Journal des Finances, Publicis Chairman Maurice Levy said a recovery in True North's share price meant the company now looked better valued. Publicis has a 9 percent stake in Chicago-based True North.
"Interpublic's initial offer did not satisfy me. Since then, True North's share price has come into its own, valuing the deal at $200 million, based on a level of $43 per share, or a capital gain for Publicis of more than $180 million," Levy said.
"I therefore do not intend to oppose this deal, given the valuation level obtained for our shareholders."
Interpublic announced in March it would offer 1.14 of its shares for each True North share, valuing True North at $40.24 per share. Publicis called that offer "peanuts."
A Publicis spokeswoman said the company was holding a board meeting on June 5 to decide whether to sell its stock on the market, tender its shares or oppose the bid.
Meanwhile, Levy said he expects Publicis' 2001 revenue growth to beat that of the market despite the economic slowdown, although investors would not see a repeat of 2000's stellar performance.
"Even if we are convinced that in 2001 and 2002 we will register growth above, and even largely above, that of the market, we will have a lot of trouble in the current context in repeating the performance of the 2000 vintage, which will go down in the annals of advertising as quite an exceptional year," he said.
He said Publicis was feeling the effects of a slowdown in the United States, where it makes 44 percent of its turnover and where advertising budgets were being cut.
The market was flat there when Publicis had expected it to grow by 4 percent, while in Europe it would probably grow 3-4 percent in 2001, down from 6-7 percent initially forecast.
Levy saw the advertising market as a whole growing 3 percent to 4 percent in 2001, which he said was "not so bad after two euphoric years."
In its home country, France, the first quarter was not bad, but he said April and May were "less good."
The integration of recently acquired Saatchi was going ahead as planned, Levy said, adding it had recently won a $100 million contract from U.S. food company General Mills Inc.
Publicis was eyeing acquisitions in marketing services or Web agencies, and was also looking at the world's second biggest advertising market, Japan.
"At the moment, we have several paths for breaking into this market, but our choice would be an agency that will give us good control through a long-term majority stake," he said, adding the ideal would be a position among Japan's 20 biggest agencies.
