- The Washington Times - Tuesday, February 22, 2000

Merger-mania again hit the advertising industry yesterday, this time locally.
France-based Havas Advertising SA yesterday became the fourth-largest ad company in the world, purchasing Snyder Communications Inc. of Bethesda, Md., for $2.07 billion in stock.
The deal, the largest ad merger in history, also marks the beginning of the end of Washington Redskins owner Daniel Snyder's involvement with the agency he founded in 1989.
The purchase, hotly rumored for a week, leapfrogs Havas from sixth-largest and creates a global giant with more than $20 billion in annual billings. The deal includes extensive operations in traditional advertising, direct marketing, interactive marketing and a deep roster of Fortune 500 clients.
"In one transforming transaction, we dramatically increase our North American presence, build all four of our divisions, increase our global scale and ideally position ourselves to serve our blue-chip clients around the world," said Alain de Pouzilhac, Havas Advertising chairman and chief executive officer.
Havas expects its North American revenues to double and total annual revenues to reach $2.2 billion, thanks to Snyder clients that include McDonald's, Microsoft and Bell Atlantic. A key part of the deal is Snyder's Arnold Communications, the Boston ad agency behind Volkswagen's popular "Drivers Wanted" campaign.
The exact status of Snyder Communications' 9,400 employees is not clear, but Havas sources said yesterday some minor attrition may happen at Snyder's Bethesda headquarters in senior management because of redundancy in roles with Havas leaders.
Havas expects to save $3 million through such layoffs. No layoffs are expected in any of the Snyder operating units.
However, Havas sources were not confident the company will keep the Bethesda offices open, as the company runs a large office in New York.
Havas will pay $29.50 per share of Snyder, using Havas American depository receipts expected to start trading this June. The price is a 44 percent premium over Snyder's closing price of $20.50 Friday on the New York Stock Exchange.
The deal is yet another in a long stretch of consolidation marking the ad industry. Each of the large global ad conglomerates, including Omnicom Group, Interpublic and WPP Group PLC, have steadily been buying up smaller competitors to serve a more diverse clientele.
"The transaction changes the [Havas'] size in a sector where size is very important, so it's a very good strategy," said Jacques-Antoine Bretteil, who helps manage $700 million in mutual funds at International Capital Gestion in Paris. Havas "will be one of the communications groups that we'll talk the most about in the years to come."
Havas' shares fell 43 euros yesterday, or 8 percent, to 485 euros ($478.60) in a falling French market.
Mr. Snyder, Snyder Communications' chairman, will have no executive role with Havas. The sale abruptly ends not only his involvement, but also what had been an epic rise and fall for the company.
Started with $3 million in borrowed money from publishing magnate Mort Zuckerman and his partners, Snyder Communications flirted several times with bankruptcy before carving a niche in health care marketing. Working with every major pharmaceutical company, Snyder Communications quickly became profitable and went public in 1996. Mr. Snyder, then 31, was the youngest chief executive on the New York Stock Exchange.
The company then soared in size and global reach by buying nearly two dozen companies between 1996 and 1998 for more than $1 billion.
The company, however, began to slow its acquisitions in late 1998 while investors hungered for more. Shares fell steadily during early 1999 and then plummeted 28 percent in one day last summer, when the company underestimated spinoff costs for Snyder subsidiary Ventiv Health Inc.
For a short while last fall, Snyder shares stood even with the $17 per share initial public offering price from three years before. The spinoffs of Ventiv, a health care marketing firm, and circle.com, an interactive marketing firm, were designed to eliminate Wall Street confusion about how to categorize Snyder, but both moves failed to impress investors.
Further troubling investors was Mr. Snyder's increasing involvement with the Redskins, the football team he bought last spring for $800 million. Despite pledges to keep Snyder Communications and the Redskins separate, the increasing time he spent with the football team made yesterday's deal widely predicted by November.
In December, the company hired Deutsche Bank Alex. Brown to review sale offers. Several global ad giants were rumored to have bid, including WPP. But only Havas was willing to pay more than $2 billion.
Mr. Snyder said in a statement yesterday "our clients, employees and shareholders will become part of a well-run, global firm and benefit from the opportunity to share in the tremendous long-term potential of Havas Advertising." He declined through a spokesman to comment further yesterday.
Ventiv is not part of the Havas deal. Circle.com, a Baltimore interactive marketing company that was spun off from Snyder as a tracking stock, will be acquired by Havas as part of the deal and represents a key portion of the company's long-term on-line strategy.

This article is based in part on wire service reports.

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