IPG To Pay $2.1 Billion For True North

CHICAGO-The Interpublic Group of Companies agreed to acquire True North Communications in a stock transaction that was valued at $2.1 billion and approved by both boards over the weekend.

The deal, which could close as soon as this summer, calls for IPG to exchange 1.14 of its shares for each of TN’s 51 million shares. The agreement capped weeks of negotiations between Chicago-based TN and a number of suitors.

The two companies’ combined revenue was $7.2 billion last year, New York-based IPG said. FCB would become IPG’s a third agency network, joining McCann-Erickson WorldGroup and The Lowe Group.

The merger plan calls for TN CEO David Bell to become vice chairman at IPG and to lead a transition team to bring the companies together. FCB Worldwide would continue to be led by CEO Brendan Ryan.

Bell and IPG chairman and CEO John Dooner said several top clients had been contacted, and most were taking what Dooner described as a “wait-and-see” attitude. Both downplayed client conflicts the merger would create.

“We are continuing to hear growing tolerance for conflict as the industry consolidates,” Dooner said.

IPG said the deal would result in annual savings of $25 million by the elimination of redundancies.

Though the acquisition requires shareholder approval, as of Monday morning TN had not contacted anyone from its largest shareholder: the French advertising company Publicis.