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De Pouzilhac Defiant After Bolloré Coup

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Paris For Havas CEO Alain de Pouzilhac, last week's public battle for control of Havas may have been over before it started.

French corporate raider Vincent Bolloré, who is Havas' largest shareholder, with a 20 percent stake, shrewdly outmaneuvered de Pouzilhac. At the raucous five-hour annual shareholders meeting, de Pouzilhac was blindsided by the betrayal of two key allies. On the morning of the session, sources said, Bolloré entered into an agreement with Havas' second-largest investor, Sebastian Holdings, which was recently brought in to support de Pouzilhac. And while the Havas CEO had been saying he had unanimous backing from his directors, the family of board member Fernando Rodés Vilà, CEO of Havas' Media Planning Group, cast a vote allowing Bolloré to get board representation. Significantly, the Rodés family, who sold MPG to Havas, is the company's third-largest investor.

The meeting last Thursday was a stinging defeat for de Pouzilhac, made all the more humiliating by the CEO's own public relations buildup and outspoken attacks on Bolloré in recent weeks. Havas insiders went to the session confident of victory, having enlisted the backing of Sebastian—an investment firm controlled by financier Alexander Vik—which bought a 4 percent stake. (Havas chief creative officer Jacques Séguéla made the introduction between the two parties, having known Amir Jahanchahi, a rep for Vik, for 15 years.) But as shareholders voted down a new stock-option compensation plan, Havas insiders—who had earlier calculated the votes they thought they had to pass the proposal—realized a major investor had moved to the enemy camp. Later, as two of de Pouzilhac's board members were not re-elected and Bolloré got four seats, it became certain that Bolloré was effectively seizing control of the company. Séguéla did not respond to requests for comment. Vik could not be reached.

De Pouzilhac declined to comment, but in an internal memo to staffers on Friday, he wrote: "We have been betrayed by someone who was supposed to help us. It is, sadly, the story of our lives." He did not identify those he felt betrayed the company. A company rep also declined to comment.

By most eyewitness accounts, it was an unbelievably rowdy meeting, punctuated by boos, whoops and cat calls, a professional spectacle unprecedented in France. Shareholders packed into several overflowing assembly rooms, linked by TV screens, at the Maison de la Chimie. The icy meeting was a showdown in the fierce rivalry between the two adversaries. De Pouzilhac refused to acknowledge Bolloré's presence, did not shake his hand when he went to the stage and avoided eye contact when Bolloré was addressing him. De Pouzilhac has accused Bolloré, who rapidly acquired his Havas stake last year, of waging a stealth takeover of the company that owns Euro RSCG Worldwide and Arnold Worldwide, in addition to MPG.

De Pouzilhac defended himself by pointing out Havas' results: After a loss of $480 million in 2003, the group, thanks in part to the strategic reorganization undertaken at the end of 2003, posted a profit of $41 million 2004.

Bolloré, who has a history of buying stakes in underperforming companies and then shaking up management and operations, offered no further clarity about his intentions for Havas. But two hours into the meeting, he made his presence felt, arguing his case and insisting he was not the "raider" portrayed by de Pouzilhac. Saying he is with Havas "for the long term," he criticized de Pouzilhac. Bolloré had a chair brought up to the stage so he could sit with the company's management during the vote. Bolloré gained seats for himself, by a 51 percent vote, and three of his associates: Thierry Marraud, Marc Bebon and Cédric de Bailliencourt. While the Rodés family is said to have cast a vote in favor of Bolloré gaining a seat, they did not vote in his three associates, sources said. Fernando Rodés declined to comment.

Bolloré also called for a vote to oust board member Jacques Mayoux, vice chairman of Goldman Sachs Europe, who is said to be working on behalf of de Pouzilhac in his battle against Bolloré and thus might be considered a biased director. Mayoux could not be reached for comment; Bolloré did not return calls for comment. Bolloré got 43 percent of votes in favor of Mayoux's ouster, with 35 percent voting against it. However, abstentions counted as "no" votes, and Mayoux remains on the board.

As Bolloré feuds with de Pouzilhac and pushes for the removal of one of his fellow board members, observers wonder how long the embattled Havas CEO—who has been at Havas for some 30 years—can remain in the job. "Nobody can understand why he didn't resign after the meeting," said one source. "How can he manage the company without the support of its largest shareholder? He's been rebuffed in a public way that is incredible—it's an unimaginable situation."

Another said de Pouzilhac "doesn't choose his battles. He loses and gets very snitty. He's a great streetfighter, but he doesn't know how to button his lip. [In Bolloré] he picked the wrong person to mess with. ... I think it's the end of de Pouzilhac—if not now, in due course."

As uncertainty about the future of Havas mounted after the meeting, there was renewed speculation about asset sales as the company's bottom line improves. While that remains to be seen, one thing already seems certain. In a business where increasingly holding-company CEOs play a role in new business, de Pouzilhac is now lacking credibility in terms of ongoing leadership at the company. "Are you going to put Alain in a pitch now?" said one source, adding that no matter what happens, "it's not good for the long-term future of the agency."

Added a shareholder: "Given that he had placed so much importance on keeping Bolloré off the board, I don't see what he can do now but resign. It's not as if he can carry on as normal and accompany his teams to major pitches. Who's going to take him seriously?"

But de Pouzilhac, in his memo, insisted: "I now intend to assume fully my responsibilities. I will devote all my heart and all my energy to continue the turnaround of our company."