New York As Havas grapples with uncertainty clouding two of its biggest clients, the fate of the ad industry's remaining midsized holding company hangs in the balance.
Losing out in Intel's global review would cost Havas' Euro RSCG Worldwide more than $30 million in revenue and the prestige associated with one of the holding company's five largest accounts (see story below). But coming up short in Volkswagen's $1.4 billion media review would deal an even harsher blow to Havas' Media Planning Group unit, already struggling in an operating environment where size equals buying clout for clients.
The double-punch of Intel and VW heightens the pressure on Alain de Pouzilhac, Havas' CEO, whose failed bid for Grey—believed to have been at a premium above Grey's then market capitalization of $1.3 billion—was perceived as a last desperate effort to keep Havas viable in a universe of larger global holding companies. With a Havas sale or breakup of assets almost a foregone conclusion, de Pouzilhac's best option might be to broker an acquisition deal on his own terms.
Omnicom Group has been approached but is not interested, sources said. Omnicom CEO John Wren had no comment. De Pouzilhac declined interview requests.
Less appealing to de Pouzilhac would be a takeover by WPP Group or Publicis Groupe. There is no love lost between the embattled Havas chief and the heads of those companies, Martin Sorrell and Maurice Lévy. Sorrell, who also declined comment, is said to be interested in MPG and in Havas assets that would bolster WPP's presence in France. He is on the record with his interest in MPG: In last month's conference call discussing WPP's acquisition of Grey, Sorrell said, "We've expressed an interest historically prior to Grey in half of MPG. We think it would fit very well with Mediaedge:cia."
For Lévy, Havas does not appear to be a priority. "It's my job as a CEO to look at every opportunity, but that doesn't signal any interest," he said.
The wild card in any Havas takeover scenario is French corporate raider Vincent Bolloré, who has amassed a 16.1 percent stake, with his investment in Havas growing to $310 million. He also claims to have the support of 25 percent of Havas' shareholders, including the Rodes family, who sold MPG to Havas.
At the next Havas board meeting in early December, Havas' directors will discuss Bolloré's suggestion to create a supervisory board. Bolloré wants that board to be headed by former Havas chairman Pierre Dauzier, who is close to the investor, and such a move could considerably increase Bolloré's influence at Havas, at de Pouzilhac's expense.
Bolloré, whose spokesman did not return calls, "either wants to sell his stake or kick out management or keep [Havas] as part of his media investment portfolio," said one source familiar with Bolloré. "I think he will bide his time."
Havas has been scrambling to find a partner to bolster MPG, whose profile in key markets such as the U.K. was hit hard after it lost half of its billings in late 2003 as Orange's $97 million account went to Initiative.
MPG handles VW primarily in North America, where the automaker spends an estimated $500 million. Grey Global Group's MediaCom has the rest. Sources said that VW's marketing and procurement executives, looking to streamline the media buying process and achieve cost savings, have recommended consolidation at MediaCom but that decision has not been finalized at the company's Wolfsburg, Germany, headquarters. MPG and MediaCom and their parent companies have not been notified yet of any decision, and they referred inquiries to VW.
Of the media review, Thomas Nickeleit, VW's Wolfsburg-based corporate-communications rep, said, "There's no decision yet."
He said the North American contract, held by MPG, remains in review, and there is no time line for a decision. He declined to comment on whether a global review or reviews in other markets have been completed, insisting it was only the North American contract in question.
Havas is said to have approached IPG's Initiative in recent months about partnering with MPG. A Havas rep said the company does not comment on rumors. Initiative declined comment.