For TN, IPG, 'This Is the Deal'

One by one, the holding companies came through to kick the tires and look under the hood of True North Communications, which since November has had a big, bold "For Sale" sign on it.Executives from the British company Cordiant were poised to strike a deal over the holidays, but that fell apart in January. Havas staged an on-again, off-again courtship and was still around at the end, while the WPP Group continued to flirt. The courtship of TN began even before its November loss of Chrysler, as late last summer a bid by Omnicom was rejected as "lowball," sources said.Interpublic Group bided its time early and made its move when it thought the price would be right.From all accounts, the strategy worked. TN was sold more cheaply than most analysts expected-too cheaply for the likes of its largest shareholder, Publicis (see sidebar). In agreeing to purchase TN at essentially a break-even stock exchange rate, IPG kept its vow to avoid making an acquisition that would dilute its own stock. The deal was valued at $2.1 billion.No one's suggesting that TN could have gotten more. "It's been shopped for so long," said Jim Dougherty, an analyst for Prudential Securities. "This is the deal. It's what it's worth."TN's sale was approved by the IPG board on March 17 and by TN's board a day later in a meeting at Bozell's New York headquarters, that ended at 10 p.m.If consummated, the TN/IPG marriage will create a $7.2 billion holding company and a handful of potential conflicts, chief among them being IPG's work for Coca-Cola. FCB handles several brands for archrival PepsiCo, including Tropicana juices, a direct competitor to Coke's Minute Maid and its upcoming line of Simply Orange juice. FCB also handles Gatorade, which would be part of Pepsi if the company's purchase of Quaker Oats goes through."We're studying it right now," a Coca-Cola representative said. "It's probably fair to say that in the past, conflicts have been a problem for us."Predictably, IPG CEO John Dooner downplayed the conflict issue. "We are continuing to hear growing tolerance for conflict as the industry consolidates," he said.Dooner noted he had called Coke about the deal before it was announced and was not discouraged. "You're going to get a wait-and-see attitude," he added.Conflicts are not the only issues for IPG. The holding company will be creating a third network and absorbing TN's other holdings while continuing its efforts to rev up Lowe Lintas & Partners and assimilate its December purchase of Deutsch. "IPG has a plateful," one industry observer noted.In the halls of FCB, the deal with IPG was seen as a good outcome to an extended period of uncertainty. FCB Worldwide CEO Brendan Ryan will maintain his position and get a seat on IPG's board, as will TN CEO David Bell, who will become a vice chairman at the holding company. "This combination puts us in the top tier," Ryan said. With TN, IPG boasts 41 multinational clients in 20 countries, although only 11 of those are from TN agencies. The combination slightly increases the percentage of IPG's business in North America and does not significantly alter its ratio of traditional to nontraditional advertising. Dooner suggested change will come more quickly once the deal is complete. "TN has some strengths in those [nontraditional] areas that IPG could build with its global footprint," he said.In his vice chairman role at IPG, Bell will oversee the transition committee. One of the decisions will be what to do with his alma mater, Bozell. Bell said the North American Bozell network will initially continue to operate as a stand-alone agency, but he acknowledged that "any possible combinations will be looked at closely."with Kathleen Sampey

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For TN, IPG, 'This Is the Deal'

Trevor Jensen

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Trevor Jensen