WPP talks with Y&R again
|
|
May 5, 2000: 12:30 p.m. ET
Ad agencies restart discussions on merger worth up to $6B; French rival not surprised
|
NEW YORK (CNNfn) - Advertising firm Young & Rubicam declined comment Friday after rival WPP Group said earlier that it had restarted talks with them about a takeover of the New York-based firm worth as much as $6 billion.
Negotiations between the companies broke down over management control issues a week ago, allowing Y&R to begin merger discussions with France's Publicis.
In a terse statement WPP confirmed the talks with Y&R (YNR: Research, Estimates) had resumed, but added, "there can be no assurances that a transaction will be agreed."
A Publicis spokesman Friday declined to say whether the announcement would affect its discussions with Y&R.
"This is absolutely no surprise. It's one of the scenarios we looked at," the spokesman said.
A deal between WPP and Y&R could value the combined company at about $18 billion, and would lift WPP into the top slot among global advertising companies, ahead of U.S. rivals Omnicom and Interpublic Group.
Last week's discussions foundered over the choice of executives for the top roles at the new company and WPP's unhappiness at senior Y&R executives' decision to award themselves "golden parachutes" worth a combined $50 million.
Y&R, the world's seventh-largest ad agency, had a market value of about $4.4 billion at its closing price Thursday of 49-5/8. Analysts previously speculated that Y&R could use its talks with Publicis to help it extract a higher offer from WPP. Last week's talks between the companies were reported to have been about a deal valuing Y&R stock in the high 60s, putting a price tag of almost $6 billion on the company.
Analysts said last week that Y&R investors are friendlier toward a WPP merger than a Publicis merger because, unlike WPP, Publicis has no U.S.-based currency.
Shares of WPP (WPPGY: Research, Estimates), which has a market capitalization of about £8 billion ($12 billion). slipped 6 to 75 in midday trading Friday.
Y&R shares gained 4-3/4 to 54-3/8 on the New York Stock Exchange.
|
|
|
|
|
|