Shareholder Sues WPP, Grey Global Group

NEW YORK WPP Group and Grey Global Group have been sued by a Grey shareholder who claims the pending merger of the two reduces compensation for Grey shareholders, according to a court filing.

David B. Shaev filed a complaint in Delaware Chancery Court on Dec. 17 against directors of both companies, alleging that the $1.5 billion sale of Grey to WPP damages shareholders because Ed Meyer, Grey Global’s CEO, stands to make some $350 million on the deal. WPP agreed to acquire Grey Global in September 2004. The deal is expected to close by the first quarter.

“Should the transaction go forward [shareholders] will receive less due to the amounts to be paid to defendant Meyer and the potential disallowance of [Grey’s] deduction for the Meyer payments,” Shaev says in the complaint.

The document also alleges that Meyer and two directors of Grey Global Group, Julian Brodsky and Daniel Shapiro, did not allow Grey to “explore and freely negotiate other bids. Indeed, it received another bid which was not pursued… The transaction with WPP was not fully explored and independently analyzed by defendants Brodsky and Tanner.” (Harold Tanner is a WPP Group director.)

Havas was the other bidder for Grey but lost out to WPP.

Shaev is asking that the court halt the acquisition of Grey by WPP, that the defendants “account for damages sustained by [Grey] and the public shareholders,” and that the court “award a reasonable attorney’s fee and reimburse all necessary expenses and disbursements incurred, including any expert fees.”

A representative for Grey Global declined to comment.

Neither Shaev nor his attorney at the Wilmington, Del., firm of Biggs and Battaglia were available for comment.