Dentsu IPO Remains on Track

An economic downturn with no end in sight will apparently not stop Dentsu from pushing forward with plans to go public late this year, the company said.

Dentsu’s IPO on the Tokyo stock exchange, probably in late November, is expected to raise $1.5 billion, making it the largest in Japan this year. Much of that money is expected to be used for capital investments.

But the expected infu sion of cash has also led to speculation about Dentsu expanding its 20 percent stake in the Bcom3 Group.

Even without the IPO money, Dentsu was said to be interested earlier this year in upping its stake, but that interest fell apart over price, sources said. Dentsu representatives said they now have no interest in owning any more of Bcom3.

“Dentsu is still focused on Bcom3 as our primary partner for the development of the breadth and depth of Dentsu’s services globally,” a representative said.

Bcom3 officials have repeatedly said the company has not considered selling additional shares to Dentsu.

A partial sale to Dentsu doesn’t offer “a particular upside” to Bcom3, said Chris Kimball, gen eral counsel for the holding com pany. “Any holder with one-third [own ership] or more looks like they control the company, and it starts to deflate the price.”

Bcom3’s 20 million shares, 15 million of which are owned by 660 company shareholders, are controlled by a four-member “voting trust” composed of CEO Roger Haupt, vice chairman Rick Fizdale, chair of the executive committee Roy Bos tock and COO Craig Brown.

Those four voting trust members collectively own 10 percent of the outstanding shares and cannot act unilaterally to sell any portion of the company. A change in corporate ownership would require approval of a majority of shareholders.

A sale would also require a revision of Bcom3’s charter, which now limits Dent su’s ownership to 25 percent whether the company is public or private.

Bcom3, which in March called off plans to go public this year, still hopes to issue an IPO, although there’s no clue as to when.

“That’s impossible to answer,” Kimball said. “The events of Sept. 11 and current market conditions haven’t done any thing to accelerate the process.”

If the company has not gone public by Jan. 31, 2002, board control to force an IPO shifts to Bostock and Brown. The provision was made to give shareholders confidence the company would follow through on its plans to go public.

If market conditions are still unfavorable on Jan. 31, it’s unlikely Bostock and Brown would push the deal forward.

“We expect the decision to go forward or hold off to be a unanimous decision,” Kimball said.