Havas Advertising, Paris, made the winning bid for Snyder Communications, which has been on the auction block since December. With the purchase, Havas gets what may be the world’s largest direct marketing agency as well as a new Interactive unit.
The $2.1 billion stock deal will create the fourth largest advertising group in the world, the companies said in a joint statement on Monday. The merger/acquisition will also shift the balance of marketing and advertising in Havas from 45% and 55% to 60% and 40% respectively.
The acquisition is expected to boost Havas’ net earnings by more than 20%; its pro-forma annual turnover to about $2.2 billion; and its pro-forma annual billings to more than $20 billion.
The new agency will be 70% owned by Havas, with Snyder shareholders owning 30%. To allow the new Havas shares to be traded in the United States, the company will issue American depositary receipts (ADRs) for the first time. The ADRs will be registered with the Securities and Exchange Commission.
If the deal with Snyder passes shareholder and regulatory approval, the French shop will have a major presence in North America, doubling its U.S. sales. Snyder subsidiaries will be grouped with their Havas analogues: Havas’ Euro RSCG with Snyder’s Bounty SCA; Campus network with Arnold Communications; and Diversified Agencies with Brann Worldwide and Circle.com.
The third largest agency – The WPP Group, based in Great Britain – reportedly dropped out because the company felt the price was too high. It was an unsolicited offer from WPP last December that is supposed to have inspired Daniel Snyder, founder and chairman of Snyder Communications, to hire Deutsche Bank Alex. Brown to look for a buyer.
In response to European reaction that the price was too high, Havas chairman Alain de Pouzilhac was reported to have noted, “Have you ever seen an acquisition made a below the market price?” Snyder is the fifth acquisition Havas has made over the past 12 months.
Snyder, based in Bethesda, MD, is the 11th largest agency in the world. Its clients include McDonald’s, SBC Communications, Adidas, Bell Atlantic, Volkswagen, and Microsoft. Havas plans about $3 million worth of job cuts at Snyder headquarters.
Snyder will leave the company, although he will receive about $275 million of Havas stock for his 9.4 million of Snyder shares. He remains head of Ventiv Health Inc., a healthcare marketing company he spun off from Synder Communications last year. Last July, a group of investors lead by Snyder bought the National Football League’s Washington Redskins, to which he is devoted.
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