Filed by The Interpublic Group of Companies, Inc.
Pursuant to Rule 425 under the Securities Act of
1933 deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: True North Communications Inc.
Commission File No. 1-5029
THE FOLLOWING IS A PRESS RELEASE DISSEMINATED BY THE INTERPUBLIC GROUP OF
COMPANIES, INC. AND TRUE NORTH COMMUNICATIONS INC. ON MARCH
19, 2001
Press Release 19 March 2001 The Interpublic Group of Companies, Inc. [Logo]
[LETTERHEAD OF INTERREPUBLIC GROUP OF COMPANIES, INC.]
For Immediate Release Contact: Susan V. Watson (212) 399-8208
Kathryn Woods (212) 727-5582
INTERPUBLIC AND TRUE NORTH COMBINE TO CREATE WORLD'S LARGEST
MARKETING COMMUNICATIONS AND SERVICES GROUP
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Transaction Valued at $2.1 Billion
Combination Expands Multinational Client Base
Extends and Strengthens Diversified Marketing Capabilities
Expanded Opportunities for Growth
Earnings Accretive Transaction
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New York, NY (March 19, 2001) -- The Interpublic Group of Companies, Inc.
("Interpublic") (NYSE:IPG) and True North Communications Inc. ("True North")
(NYSE:TNO) announced today that they have reached a definitive agreement under
which Interpublic will acquire True North in a stock-for-stock pooling of
interests transaction, valuing True North at $2.1 billion.
Interpublic will exchange 1.14 shares for each outstanding share of True North.
True North has approximately 51 million shares outstanding.
The transaction will unite the resources of two of the leading diversified
advertising and marketing communications firms to create the world's largest
marketing communications organization serving the largest base of global
accounts, including 40 accounts served in more than 20 countries. Combined pro
forma revenue in 2000 of $7.2 billion generated pro forma operating profit of
more than $1 billion.
The addition of True North will expand Interpublic's leadership position in many
of its core business sectors, including advertising, media services, healthcare,
public relations, event and promotional marketing, direct and relationship
marketing, branding, and digital communications services. The larger base of
agencies will provide the clients of both organizations with access to a greater
range of high-quality marketing communications services, thus accelerating under
one roof the growth opportunities for both groups of companies.
With offices in more than 130 countries, the combined organization will have
leading advertising and marketing operations throughout all regions of the
world, including in the U.S. and Canada
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in North America; in the UK, Germany, Italy and Spain in Europe; in Brazil,
Argentina and Mexico in Latin America; and in Japan, China and India in Asia
Pacific.
Interpublic's acquisition of True North is expected to be accretive to earnings
per share in 2001 and 2002, after including near-term synergies. Annualized cost
savings in excess of $25 million have been identified. Interpublic expects to
realize additional top-line business synergies, including cross-selling
opportunities that will further enhance the value of the combination.
Commenting on the transaction, John Dooner, Chairman and CEO of Interpublic
said: "Interpublic and True North create an industry-leading combination of
advertising and marketing services capabilities to offer our clients on a global
basis. By joining our companies, we have advanced our ability to address
client-led trends towards globalization and integrated marketing communications.
"True North shares Interpublic's commitment to clients and our focus on
providing total communications solutions to build the demand side of their
business and realize the optimal value of their brands. When people ask me `Why
True North?' It's simple: Great clients, great people and a shared vision for
the future."
David Bell, True North Chairman and CEO, said: "We said that we were open to
strategic possibilities that benefited our clients, our brands and our
shareholders. In joining Interpublic, we believe that all three will benefit
from becoming part of a top-tier marketing communications company whose size and
resources provide new opportunities for each." Added Bell, "Our management and
Interpublic's management agree totally on a vision for the future, and we
believe that our culture of collaboration will be a great fit within the culture
of Interpublic."
Details of the Transaction
Under the terms of the Merger Agreement, each share of True North common stock
will be exchanged for 1.14 shares of Interpublic common stock. In addition,
outstanding True North options will be converted into Interpublic options
consistent with the exchange ratio. The transaction is expected to be tax free
to True North shareholders, and will be accounted for using the
pooling-of-interests method. The transaction is subject to the approval of True
North shareholders, receipt of regulatory approvals and other customary
conditions. The transaction is expected to be completed in the summer. The Board
of True North has given its unanimous recommendation to the terms of the
transaction.
Benefits of the Transaction
Creates the World's Largest Marketing Communications Group
The transaction will create the world's largest marketing communications group
with combined
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pro forma 2000 revenues of $7.2 billion and 850 offices in more than 130
countries. Among its peer group, Interpublic will command premier positions in
six of the 10 marketing communications disciplines most valued by clients, as
illustrated below.
Rankings by Category
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Total Revenue #1
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Advertising Billings #1
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Media Services #1
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Healthcare #1
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Meetings and Events #1
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Sports Marketing #1
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Branding and Corporate Identity #1
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Sales Promotion (US) #2
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Marketing Research #2
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Public Relations #3
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Customer Relationship (Direct) Marketing #3
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FCB Adds Third Global Agency Network to Interpublic
True North brings a third global agency network to Interpublic as FCB Worldwide
joins McCann-Erickson WorldGroup, the largest global agency network, and The
Lowe Group, ranked 4th in the world. FCB ranks as the fourth largest US
advertising network and the world's 11th largest in terms of revenue, providing
advertising and integrated marketing services. Led by Brendan Ryan, FCB has an
excellent creative reputation and strong, long-standing partnerships with
blue-chip clients, including 8 multinational relationships in which FCB provides
services in more than 20 countries. Interpublic believes that there will be
considerable opportunities to expand FCB's relationships with its clients, both
in terms of geography and in the range of services offered.
In addition, Interpublic's roster of leading independent agencies, including
Campbell Ewald, Campbell Mithun, Dailey, Deutsch, The Martin Agency, Mullen and
Suissa Miller, will be complemented by the addition of Bozell Group and Temerlin
McClain, which together generated $2.6 billion in billings in 2000.
Enhances Diversified Marketing Capabilities
The acquisition will also enhance the scope of Interpublic's diversified
marketing communications offerings, bringing such agency brands as BSMG
Worldwide in global public relations, Marketing Drive Worldwide in global
promotion services and FCBi in customer relationship management. Along with the
strong marketing communications agencies of
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Interpublic, the combination will enhance powerful leadership positions in
promotion, healthcare, event marketing, customer relationship marketing and
corporate branding and identity.
True North agencies add leadership in specialized marketing sectors such as
multi-cultural marketing, youth marketing and advocacy advertising,
complementing Interpublic's expertise.
In 2000, Interpublic derived approximately 41% of its revenue from marketing
services. Marketing services revenue for the combined companies on a pro forma
basis totaled $2.8 billion in 2000, or 40% of revenue, as set forth in the table
below:
Interpublic True North Combined % Total
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$ mm % $mm $mm
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Promotion, Direct 1,235 22% 365 1,596 22%
and Event Marketing
Public Relations 461 8% 166 627 9%
Marketing 602 11% 12 614 9%
Intelligence
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With a premiere client roster and diversified service offering, Interpublic's
growth will be fueled by offering new and existing clients an expanded array of
marketing communications services in countries around the world.
Already the world's largest provider of advertising and media services,
Interpublic's advertising and media revenues represented 59% of 2000 revenues.
With the addition of True North, advertising and media represent approximately
60% of the combined company's pro forma revenues.
Geographic Diversification
In 2000, Interpublic derived approximately 55% of its revenues from North
America. With the inclusion of True North, domestic revenues represented 59% of
pro forma revenue. Fast-growing economies in Asia and Latin America contributed
nearly 15% of revenues in 2000.
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Interpublic True North Combined % Total
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$ mm % $mm $mm
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North America 3,094 55% 1,172 4,266 59%
Europe 1,688 30% 221 1,909 26%
Asia/Pacific 619 11% 66 685 9%
Latin America 225 4% 69 294 4%
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Management Depth/Transition Team
True North brings with it a respected management team with deep industry
experience and a strong client-centric focus. David Bell, Chairman and CEO of
True North, will be named Vice Chairman of Interpublic. Brendan Ryan will remain
CEO of FCB Worldwide.
A transition team will be headed by David Bell, working with Bruce Nelson,
Executive Vice President and Chief Marketing Officer of Interpublic, Barry
Linsky, Executive Vice President of Planning and Business Development, and Kevin
Smith, Executive Vice President and Chief Financial Officer of True North.
Supported by John Dooner and Sean Orr, Executive Vice President and Chief
Financial Officer of Interpublic, the team will ensure a seamless transition.
Expanded Growth Opportunities
Interpublic's long-term strategy to offer an ever-larger client base a wider
range of high quality marketing services will be a key source of future revenue
growth. Interpublic has a proven track record of accelerating growth by
providing clients with aligned marketing services that help them build their
brands. In addition, considerable opportunities exist to expand both the
geographic scope and the range of services offered to True North's clients.
Finally, Interpublic's clients will benefit from the specialized marketing
services operations offered by True North.
Margin Improvements
During 2000, Interpublic again achieved the highest operating margin among
publicly-traded companies in the marketing industry, reporting an EBIT margin of
14.8% and an EBITDA margin of 19.4% (before unusual items), compared with EBIT
and EBITDA margins of 12.8% and 17.7% respectively at True North, excluding
unusual items. As part of Interpublic, with its strong
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financial and management practices, True North's operations will have the
opportunity to continue their trend of strong margin improvement.
Pro forma for the transaction, the company expects to report earnings per share
of $1.65-$1.70 in 2001, which is consistent with recent guidance.
About True North
True North Communications is one of the world's top 10 global advertising and
communications holding companies. It has three major global brands: FCB
Worldwide, advertising; BSMG Worldwide, public relations; and Marketing Drive
Worldwide, marketing services. In addition, True North has a strong set of other
brands including Bozell Group, New America Strategies Group, Temerlin McClain,
R/GA, Tierney Communications and TN Media. True North also has a stake in the
German-based advertising agency, Springer & Jacoby. Based in Chicago, True North
had 2000 revenues of approximately $1.5 billion.
Morgan Stanley is acting as financial advisor to True North in the transaction.
Sidley & Austin provided outside legal counsel to True North.
About Interpublic
The Interpublic Group of Companies, Inc., is one of the largest organizations of
advertising agencies and marketing communications companies. Its major worldwide
companies include McCann-Erickson WorldGroup, The Lowe Group, Draft Worldwide,
Initiative Media Worldwide, Octagon, NFO Worldwide and the Allied Communications
Group. It reported revenue of $5.6 billion in 2000.
Goldman, Sachs & Co. is acting as financial advisor to Interpublic on this
transaction. Cleary, Gottlieb, Steen & Hamilton provided legal counsel to
Interpublic.
Conference Call Information
There will be a conference call today, Monday, March 19, 2001, at 11:00 am EST
with the management of Interpublic and True North. Investors are invited to
dial(800) 288-8967 to access the call; international callers should dial (612)
332-0418. The access code is 577714.
A replay of the call will be available at the company's website,
www.interpublic.com.
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Cautionary Statement
This document contains forward-looking statements. Statements that are not
historical fact, including statements about Interpublic's beliefs and
expectations constitute forward-looking statements. These statements are based
on current plans, estimates and projections, and therefore undue reliance should
not be placed on them. Forward-looking statements speak only as of the date they
are made, and Interpublic undertakes no obligation to update publicly any of
them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. Interpublic
cautions that a number of important factors could cause actual results to differ
materially from those contained in any forward-looking statement. Such factors
include, but are not limited to, those associated with the effect of national
and regional economic conditions, the ability of Interpublic to attract new
clients and retain existing clients, the
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[LETTERHEAD OF INTERREPUBLIC GROUP OF COMPANIES, INC.]
financial success of the clients of Interpublic, and developments from changes
in the regulatory and legal environment for advertising companies around the
world, and the successful completion and integration of acquisitions which
complement and expand Interpublic's business capabilities.
Another important factor is Interpublic's acquisition strategy. One of
Interpublic's business strategies is to acquire businesses that complement and
expand its current business capabilities. Accordingly, Interpublic is usually
engaged in evaluating potential acquisition candidates. Interpublic is currently
engaged in a number of preliminary discussions that may result in one or more
substantial acquisitions. These acquisition opportunities require
confidentiality and from time to time give rise to bidding scenarios that
require quick responses by Interpublic. Although there is uncertainty that any
of these discussions will result in definitive agreements or the completion of
any transactions, the announcement of any such transaction may lead to increased
volatility in the trading price of the shares of Interpublic.
Moreover, the success of recent or contemplated future acquisitions will depend
on the effective integration of newly-acquired businesses into Interpublic's
current activities. Important factors for integration include realization of
anticipated synergies and the ability to retain new personnel and clients.
Investors should evaluate any statements in light of these important factors.
The Interpublic Group of Companies, Inc. and True North Communications Inc. will
be filing a proxy statement/prospectus and other relevant documents concerning
the proposed transaction with the Securities and Exchange Commission. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors
and security holders will be able to obtain the document free of charge at the
SEC's website (www.sec.gov/EDGAR), or at the SEC's public reference room located
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at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room. In
addition, documents filed with the SEC by Interpublic and True North may be
obtained free of charge by contacting The Interpublic Group of Companies, Inc.,
1271 Avenue of the Americas, New York, NY, 10020, Attn: Investor Relations (tel:
212-399-8057), or True North Communications Inc. at 101 East Erie Street,
Chicago, IL, 60611, Attn: Corporate Communications (tel: 312-425-6500).
INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT BECOMES
AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION. True North and
certain other persons referred to below may be deemed to be participants in the
solicitation of proxies of True North's stockholders to approve and adopt the
merger agreement with Interpublic. The participants in this solicitation may
include the directors and executive officers of True North, who may have an
interest in the transaction as a result of holding shares or options of True
North. A detailed list of the names and interests of True North's directors and
executive officers, and of their ownership interests in True North, is contained
in True North's proxy statement for its 2000 Annual Meeting, which may be
obtained without charge at the SEC's website (www.sec.gov).
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Appendices Attached (2)
Appendix 1: Major Brands
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Promotion, Direct Marketing
Advertising & Event Marketing Public Relations Intelligence
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McCann-Erickson Draft Worldwide Weber/Shandwick NFO
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Lowe Lintas MRM BSMG Worldwide Future Brand
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FCB Worldwide Jack Morton Golin /Harris
Worldwide
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Bozell Group Marketing Drive
Campbell Mithun Worldwide
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Campbell-Ewald Momentum
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Deutsch Octagon
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Hill Holliday
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Multicultural
Agencies:
-Don Coleman
-Siboney
-Imada Wong
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Temerlin McClain
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Appendix 2: Selected Major Clients
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American Airlines AT&T Burger King
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Chase Coca-Cola Compaq
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Coors' General Mills General Motors
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Gillette Glaxo Johnson & Johnson
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Kraft/General Foods L'Oreal MasterCard
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Merck Microsoft Nabisco
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Nestle Nortel Novartis
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Pfizer Quaker Samsung
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SC Johnson Sprint Subaru
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Taco Bell Unilever Verizon
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