In October Omnicom agreed to acquire Flywheel Digital, the Maryland-based digital commerce business of Ascential, headquartered in the UK, for a net cash purchase price of approximately $835 million. It’s said to be the largest single acquisition that Omnicom has made.
The deal followed the summary dismissal of a lawsuit earlier this year brought by Compass Marketing alleging that Flywheel and some of its founders (who previously worked at Compass) stole trade secrets and engaged in fraud and other illegal acts that harmed its business. Ascential was also named a defendant. In part the decision found some of the claims outside the statute of limitations.
But Compass isn’t giving up and continues to pursue legal remedies for damages that it alleges Flywheel inflicted on its business.
It has appealed the Federal Court decision and has filed a similar suit in Maryland State court. And it is understood that Compass is considering asking the courts to block the sale of Flywheel pending final decisions in the Federal and State cases.
In its “prayer for relief” the State court complaint lists numerous damages to which it believes it is entitled including compensatory, punitive and exemplary damages and other value such as Flywheel’s alleged “conversion” of Compass’ personal property including trade secrets.
In August the State court stayed the case and for now, the stay order remains in effect, likely until a decision on the appeal in the Federal case is made.
The Compass-Flywheel battle is in part a messy family dispute. John White is CEO of Compass Marketing. His brothers Michael and Daniel are accused of using embezzled funds to help get Flywheel up and running.
When Omnicom announced the pending transaction, it noted that it expects to close in the first quarter of 2024 and that it is subject to Ascential shareholder approval, regulatory approvals, and certain closing conditions.
Omnicom declined to comment for this story.