True North Wins a Battle, But Not the War, vs. Publicis

CHICAGO–True North Communications has won a respite from Publicis’ efforts to block its proposed acquisition of Bozell, Jacobs, Kenyon & Eckhardt, but is still trying to persuade shareholders and analysts that the deal is a wise course to take.
U.S. District Court Judge Joan B. Gottschall issued a preliminary injunction Dec. 10, preventing Publicis’ attempt to block the deal at a TN shareholders’ meeting on Dec. 30. Publicis was hoping to acquire a majority of TN’s stock to derail the purchase.
Publicis chairman Maurice Lƒvy may still have his way, even if he does not get the injunction overturned, as he will seek to do in court this week. “I am betting on the reaction of analysts, on the advertising industry and, above all, on [TN] shareholders,” Lƒvy was quoted as saying last week before the injunction was issued. He had no comment following the ruling.
“Publicis has had the opportunity to make some noise [in opposition to the deal]. TN’s shareholders are not living in caves; they’ve heard it,” said Karen Ficker, an analyst with Furman Selz in New York.
Ficker, however, said she believes “the odds favor the deal being approved.” She estimates the value of the post-merger stock as being in the “mid 30s,” above the $28 per share Publicis had offered.
With the injunction ruling pending, Publicis executives were told by a judge not to attend a Dec. 9 meeting with Lance James, portfolio manager at David L. Babson Co. in Cambridge, Mass., a TN shareholder. TN chief executive Bruce Mason, however, was there.
“If Publicis’ offer is resurrected, or if anyone else wants to make an offer, we’ll certainly listen and evaluate them,” said James. “But barring that, we will vote our shares in favor of the deal.”
Publicis still has some options: Lƒvy has said he may mount a challenge to Mason and TN’s other board members next year. If shareholders approve the BJK&E merger, however, it is unlikely they will oust the board that engineered it.
Publicis may also be receptive should another suitor–such as Interpublic Group of Cos., which is believed to have discussed a bid with TN earlier this year, or WPP Group–make a tender offer before the BJK&E merger vote is taken. But time is running out.