Court blocks French firm’s proxy battle for ad agency
CHICAGO (AP) _ A French advertising agency was blocked for the second time in as many weeks from launching a hostile offer for control of the parent of the agency Foote, Cone & Belding Worldwide.
Delaware Chancery Court Judge William Chandler issued an emergency restraining order preventing Publicis SA from soliciting shares of True North Communications until he conducts a hearing on Monday.
His ruling came just a day after an appeals court in Chicago lifted another restraining order filed in federal court.
That decision had given Publicis new hope it could take control of True North and thereby stop the Chicago company’s planned purchase of the agency Bozell, Jacobs, Kenyon and Eckhardt Inc.
The 7th U.S. Circuit Court of Appeals said that U.S. District Judge Joan Gottschall did not have the proper authority last week to order Publicis to stay out of the matter. The appellate court said that under terms of Publicis’ and True North’s agreement to end a 10-year joint European venture earlier this year, any litigation between the two should be brought to Chancery Court in Delaware and not to federal court.
True North general counsel Theodore Theophilos contends the dissolution agreement prevented Publicis from launching a proxy battle for True North and said the company was confident it could get a new restraining order.
``The district court’s ruling on the merits of our claims were not criticized by the appellate court; the facts are still the facts,″ Theophilos said.
A spokeswoman from an outside agency for Publicis said the company was disappointed with the Delaware judge’s ruling and could not comment on its next actions because of Chandler’s cease and desist order.
Chandler noted before ruling that True North would have no chance to persuade its shareholders to reject Publicis’ offer and approve the Bozell buyout if Publicis’ tender offer wasn’t temporarily put on hold.
Publicis, which already owns 18.4 percent of True North stock, is seeking to buy an additional 31.7 percent in hopes of initiating a merger between the two ad firms and derailing True North’s proposed takeover of Bozell, the company responsible for the milk mustache campaign.
Publicis wants permission to offer $28 a share for 9.62 million shares of True North. True North has about 24.6 million shares in all.
Some analysts say Publicis is fighting hard to stop the Bozell acquisition because if it goes through with shareholder approval on Dec. 30, Publicis’ stake in True North would fall to about 10 percent, diluting the French firm’s control and possibly forcing it to sell its remaining stake.
That could be a setback for Publicis’ efforts to promote itself as a global agency capable of handling work for such giants as MasterCard and Coca-Cola.
Publicis is the second-largest advertising concern in Europe, with clients including Nestle, L’Oreal cosmetics and Renault cars. It employs 6,000 people worldwide and operates in 48 countries.
If True North’s takeover of Bozell goes through, the combined firm would have more than $11.5 billion in billings, more than 11,000 employees and 297 offices worldwide, making it the sixth-largest advertising agency in the world.