Monday February 21 5:03 PM ET
French Ad Firm Havas Buys Snyder
By Sue Landau
PARIS (Reuters) - France's Havas Advertising agreed to buy U.S. rival Snyder Communications Inc. in a $2.1 billion stock deal
that would create the world's fourth-biggest advertising group, the companies said on Monday.
Snyder, based in Bethesda, Md., owns advertising and public relations subsidiary Arnold Communications, marketing companies
Brann Worldwide and Bounty SCA Worldwide and interactive and multimedia company Circle.com.(NasdaqNM:CIRC - news)
Its chairman, Daniel Snyder, bought the National Football League's Washington Redskins team in July.
Havas said the offer, which values Snyder at $29.50 per share, could add more than 20 percent to its 2000 net earnings before
synergies and goodwill and ''even more'' after that. Snyder shares finished on Friday at $20.50 in trading on the New York Stock
Exchange, which was closed Monday for Presidents Day.
Industry analysts said the deal would give Havas, now the sixth-largest global advertising firm, a major presence in North
America. Snyder, which ranks as the No. 11 firm worldwide, has clients including such blue-chip corporations as McDonald's,
SBC Communications and Microsoft.
The two companies agreed to the deal on Sunday evening after a contest pitting Havas against Britain's WPP Plc. Snyder has
been on sale since December.
Havas Advertising Chairman Alain de Pouzilhac said a news conference on Monday that the two groups fit well together, with no
conflict between clients.
''In terms of geographical fit, businesses, philosophy and clients, there was no more perfect marriage than this one ... There is not
a single client conflict,'' de Pouzilhac said.
The acquisition, pending shareholder and regulatory approval, will double Havas Advertising's U.S. sales so they account for 45
percent of turnover, up from 30 percent now.
Snyder Communications Chief Executive Daniel M. Snyder said in a statement, ''Our businesses will flourish under Havas
Advertising's ownership. It is one of the world's leading communications firms, led by an impressive management team with a track
record of success.''
The new firm will be about 70 percent owned by the French company after a share swap in which the company will issue
American depositary receipts (ADRs) for the first time.
The ADRs, which will allow Havas shares to be traded in the United States, will be registered with the Securities and Exchange
Commission on closing the transaction, which the companies expect by mid-year. The companies said Havas Advertising
shareholders will own about 70 percent of the expanded Havas Advertising, with Snyder shareholders owning the remaining 30
percent.
The transaction is expected to be tax-free to shareholders of both companies, and the terms have been unanimously approved by
the both boards.
Havas Advertising shares fell 8.14 percent on Monday, to close at 485 euros, underperforming the CAC-40 index, amid
concerns the $2.1 billion price tag was too high.
''The stock is very expensive. It rose strongly with the rest of the sector recently and is now coming back to more normal levels,''
said one trader. ''On top of that, the price they paid for Snyder seems quite high.''
De Pouzilhac rejected this view: ''Have you ever seen an acquisition made at below the market price?''
Advertising industry analysts said the deal would move Havas toward the front of the pack of global companies vying for
multimillion-dollar international marketing accounts. They said the acquisition of Snyder would make Havas Advertising more
attractive to international investors than domestic rival Publicis SA.
''In this industry if you don't make the acquisition, you are in danger of losing your clients to people who can offer them the service
they want,'' said Lorna Tilbian, media analyst at WestLB Panmure in London.
''Havas were underrepresented in the U.S. market and this is an attempt to rebalance their geographical exposure,'' Tilbian said.
TH (no position at this time) |
