Publicis, Dentsu Sever Strategic Alliance
Paris-based ad agency holding company Publicis Groupe and Dentsu, the Japanese advertising group, have terminated their nearly decade-long strategic alliance.
Publicis Groupe paid $850 million cash to buy back 18 million shares, representing 9.3% of its outstanding stock that was held by Dentsu, the company said.
The two companies started unraveling their alliance in 2010, when Publicis Groupe paid Dentsu $290 million for nearly 4% of Publicis stock that Dentsu held.
The alliance was a marriage of convenience that began with Publicis Groupe’s acquisition of Bcom3 back in 2002 for $3 billion. At the time, Dentsu was a stakeholder in Bcom3, the parent of Leo Burnett and D’Arcy Masius Benton & Bowles. The Japanese company ended up with a 15% stake in the merged company and representation on the Publicis supervisory board.
With Friday’s termination of the alliance, the two Dentsu executives currently on the Publicis board have resigned, including Dentsu president and CEO Tadashi Ishii.
Publicis said nearly 11 million of the repurchased shares would be cancelled immediately, with the remaining shares held in reserve for incentive plans, options and acquisitions. The holding company said the cancellation of the repurchased shares would result in 6% additional value to the company’s remaining outstanding shares in 2012.
While the formal strategic alliance between the companies has ended, the ongoing relationship continues on several fronts. Dentsu still retains just over 2% of Publicis Groupe’s stock.
In addition, two joint ventures between the two companies remain in place and unchanged, including Tokyo-based ad shop Beacon Communications, in which Publicis is the controlling partner and Dentsu Razorfish, which is controlled by Dentsu.
Publicis Groupe CEO Maurice Lévy described the alliance as “amicable and exemplary.” He further stated he was certain the two would continue their professional relationship "in a fruitful manner." Dentsu's Ishii echoed his sentiments, noting that the agencies would work to further "the mutual growth of our clients and developing our businesses.”
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