Kiwi ad chief survives in big takeover

By DITA DE BONI

The mystery bidder for the Saatchi & Saatchi advertising agency in Britain has been unmasked as European advertising giant Publicis.

The position of expatriate New Zealander and Saatchi chief executive Kevin Roberts is said to be secure in the newly configured network.

Publicis confirmed it would acquire Saatchi & Saatchi for euros 2 billion ($4 billion) in an all-share takeover after weeks of frenzied market speculation.

Publicis and Saatchi would be maintained as independently managed agencies and Mr Roberts, who has overseen three years of healthy growth with the London-based agency network, would remain at the helm of Saatchi as well as becoming a member of the directoire (management board) of the newly merged Publicis Group SA.

According to the terms of his contract negotiated with Saatchi & Saatchi in 1997, Mr Roberts still has the option of a "golden parachute" payout of about $3 million if he decides to resign in the two years after a change of control of the company.

He was not giving any indication of his long-term intentions to reporters yesterday before the official announcement from Publicis.

The outcome confirms his skills as a survivor. His role as a New Zealand Rugby Football Union board member came under fire after the All Blacks World Cup disaster but he shrugged off that criticism to emerge with a powerful new role in the next America's Cup defence.

Publicis Groupe SA will be the world's fifth largest advertising company with a market capitalisation of around euros 6.3 billion ($12.6 billion) and revenues of euros 2.1 million ($4.2 million). It will be listed on the New York Stock Exchange.

To complete the merger, Saatchi shareholders will be offered 500p ($15.88) a share and will hold a 30 per cent share of the newly merged company, with Publicis to issue 4.1 million new shares to complete the transaction.

The final share offer represents a 19 per cent premium on the last closing price of Saatchi shares. The shares have underperformed on the London market by 7 per cent this year and last closed 27.3 per cent up at 421p on the back of heated market speculation.

Publicis is Europe's largest agency network, with a global tenth ranking. Saatchi & Saatchi ranks 12th worldwide. The combined agencies will boast an impressive client list including Saatchi's accounts for Toyota, DuPont, and the world's largest consumer goods advertiser, Proctor & Gamble.

About 50 per cent of Saatchi's revenues are generated in the United States, and it is thought a deal between the two companies will bolster the French firm's ambitions to further penetrate the US market.

In 1998, Publicis said it wanted 20 per cent of its business to come from the US by 2000, and a month ago it lost to British rival WPP in efforts to buy US group Young & Rubicam.