LONDON (CNNfn) - French advertising group Publicis will announce the all-share takeover of British-based advertising company Saatchi & Saatchi, according to industry sources.|
Sources told Reuters News Service that the transaction will have a "big premium" over Saatchi's recent average share price. Saatchi's share price closed up 90-1/2 pence, at 421-1/2 pence, 27.34 per cent above its previous closing price.
Earlier, Publicis (PUBP) said it was holding a press conference at 0700 GMT (8:00 a.m. local time) in Paris on Tuesday.
Saatchi & Saatchi shares (SSI) soared more than 20 percent to 402 pence at the London close, valuing the firm at £903 million ($1.37 billion), after the brief announcement that it is in talks that might lead to a merger.
Last month, London-based WPP Group (WPP) paid $4.7 billion to acquire U.S. rival Young & Rubicam Inc. to leapfrog Interpublic and claim the world No. 1 spot from U.S.-based Omnicom Group Inc. (OMC: Research, Estimates). WPP beat out opposition from France's Publicis SA (PPUB) for Y&R.
Saatchi grew into one of the world's largest advertising firms during the 1980s, before coming close to collapse after rapid expansion saddled the firm with huge debts. The debt load led to the ouster of brothers Charles and Maurice Saatchi, the company's founders.
Renamed Cordiant, the company in 1997 split itself in two, with Saatchi & Saatchi re-emerging as the name of one of the two new entities. The company generated a record £735 million in new business last year and posted full-year pretax earnings of £36.3 million, up from £34.8 million a year earlier.
Saatchi stock is also listed on the New York Stock Exchange. Shares of Saatchi (SSA: Research, Estimates) shares rose 7-13/16 to close at 33-3/16 on Monday.
The Saatchi brothers no longer are connected to Saatchi & Saatchi, and operate their own firm, known as MC Saatchi.
-- from staff and wire reports