The Leap Group's sale of the bulk of its One World Communications subsidiary to Young & Rubicam is being held up by legal wrangling that could derail the deal, according to the company's quarterly report.
Leap in July announced it had reached an agreement to sell to Y&R its Asian American agency, Kang & Lee, and the AT&T business of YAR Communications, all of which Leap had grouped under the One World unit. The sale price was estimated by sources at $10-15 million.
The sale of YAR's cornerstone AT&T account was negotiated without the involvement of Yuri Radzievsky, YAR's president and chief executive officer. He and his wife, Anna, partners at YAR, filed a complaint with the American Arbitration Association, claiming Leap had breached the couple's employment agreement. They sought unspecified damages and to quash the sale, according to Leap's quarterly report.
Leap and YAR went to the Supreme Court of New York, asking that the Radzievskys' arbitration request be thrown out. The matter was pending when the couple withdrew their request on Sept. 9.
A day earlier, however, the Radzievskys filed suit against Leap, YAR and Y&R, seeking compensatory and punitive damages and an injunction against the One World sale.
The lawsuit was dropped by the Radzievskys on Sept. 14. The two sides remained in settlement negotiations late last week, according to both Yuri Radzievsky and Leap Group chief executive officer Fred Smith. Both declined to comment further.
According to the quarterly report, Y&R has told Leap the deal cannot go forward until a settlement is reached.
Leap reported income of $73,894 for the quarter ended July 31 on revenues of $9 million. Revenues were up 18.7 percent over the same quarter a year ago, a figure the company attributed primarily to the acquisition of Kang & Lee last year. --with Hank Kim