True North And Publicis Duke It Out In Court

As Lawsuits Fly, Agency Heads Hope to Garner Shareholder Support

CHICAGO–Attorneys for True North Communications and Publicis S.A. were in U.S. District Court here Friday, each seeking injunctions against the other’s actions. The courtroom scenario is likely to play out repeatedly in coming weeks.
The battle for control of TN is extending to Wall Street and other financial fronts.
On Tuesday, both Publicis chairman Maurice Lƒvy and TN chairman Bruce Mason will be in Cambridge, Mass., to argue their positions to Lance James, a major TN investor. “We’ll hear both parties out before we make a decision,” said James, a portfolio manager at David L. Babson Co., which controls about 1.6 million TN shares, roughly 7 percent of the total outstanding. James called Levy’s $28-a-share offer “inadequate”; he estimates TN can earn $1.50 more per share next year.
“But I want to hear why Lƒvy is so negative on [TN’s proposed acquisition of Bozell, Jacobs, Kenyon & Eckhardt Inc.],” James said. “There is a legitimate question of what this does for them internationally.”
Last week, TN answered the Publicis lawsuit seeking an injunction against the merger vote on BJK&E. In a countersuit, TN dismissed Publicis’ complaint that its stock would be diluted by the BJK&E deal. TN claims “Publicis Communication has the right to buy additional shares” to bolster its ownership.
In boldly opting to exercise that right, Lƒvy upped the ante, offering $28 per share for up to 9.6 million shares. Publicis already owns 18.5 percent of TN stock, and Lƒvy needs the additional shares to gain a controlling majority stake.
On Friday, Mason sent a letter to shareholders, assuring them the Dec. 30 meeting to approve the BJK&E deal is still on. His letter urged them “not to act hastily with respect to your investments” until its board responds to Lƒvy’s latest offer. It also urges shareholders not to vote against the merger.
Mason will hold meetings with TN staffers beginning today in Chicago. Past and current TN employees hold roughly 20 percent of its stock. Publicis hopes to tap pockets of TN opposition to the BJK&E marriage.