NEWS
MORGAN STANLEY DEAN WITTER
17 July, 1998
Not for release, publication or distribution in or into Canada,
Japan or Australia.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
("Interpublic")
Recommended proposal for the acquisition of
INTERNATIONAL PUBLIC RELATIONS PLC
("IPR")
and
Interim Results of IPR for the six months ended 30 April, 1998
SUMMARY
The Boards of IPR and Interpublic jointly announce that they have
reached an agreement on the terms of a proposed acquisition by
Interpublic of IPR to be effected by means of a Scheme of
Arrangement to be proposed by IPR under section 425 of the
Companies Act 1985. As consideration under the Scheme, IPR
Shareholders will receive shares in Interpublic, a New York Stock
Exchange listed company headquartered in the U.S. Interpublic is
one of the largest organisations of advertising and marketing
communications companies in the world.
Under the Scheme, Interpublic will issue new Interpublic Shares
to IPR Shareholders on the following basis:
for every 100 IPR Shares 1.845 new Interpublic Shares
and so in proportion for any other number of IPR Shares held.
Based on the New York Stock Exchange closing price of $62 11/16
per Interpublic Share on 16 July, 1998 and an exchange rate of
$1.6336 to (pound)1, the Acquisition values the entire issued and
to be issued share capital of IPR at approximately (pound)103.6
million (assuming exercise of all outstanding options under the
IPR Share Option Schemes) and each IPR Share at approximately
70.8 pence.
On the above basis the Acquisition represents the following:
o A 43.0% premium over the middle market closing price of
49.5 pence per IPR Share on 16 July, 1998, the last
dealing day prior to this announcement;
o A 46.0% premium over the middle market closing price of
48.5 pence per IPR Share on 13 January, 1998, being the
day immediately before the start of the Offer Period;
o A 64.7% and 66.2% premium over the average middle
market closing price of 43.0 pence and 42.6 pence per
IPR Share in the one month and three months,
respectively, prior to 14 January, 1998.
The Scheme is conditional, inter alia, on the consent of IPR
Shareholders and the approval of the Court. It is currently
expected that the IPR Shareholders' meetings will be held in
early September 1998 and that the Scheme will become effective in
early October, 1998.
The Boards of Interpublic and IPR believe that the Acquisition
represents an important opportunity for their respective
businesses.
In particular, the Board of Interpublic believes the Acquisition
will:
o mark the continuation of Interpublic's successful growth
strategy to build incremental revenue streams through
diversification. The combination of IPR and Interpublic's
Weber Public Relations Worldwide business will result in a
public relations group with 129 offices and 52 affiliate
offices, making it one of the largest public relations
organisations in the world
o establish Interpublic as a leading operator in the fast
growing public relations industry
o provide Interpublic's clients with an additional global
communications network to meet their changing business needs
o enable Interpublic to continue to benefit from the growing
strategic alignment of advertising and public relations
o complement Interpublic's multinational client base and
proven management strength in serving worldwide accounts.
The Board of IPR believes that:
o IPR Shareholders will achieve an attractive uplift in
capital value and a significant improvement in liquidity by
exchanging their IPR Shares for Interpublic Shares
o the Acquisition will allow IPR to expand its own global
public relations service using Interpublic's international
networks to supplement the existing IPR networks
o IPR's business will benefit from becoming part of one of the
largest organisations of advertising and marketing
communications companies in the world and IPR's position as
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one of the largest public relations groups in the world will
be enhanced, improving its ability to serve global clients
and providing better career opportunities for staff
o the Acquisition will enable IPR to provide a wider range of
above and below the line marketing services to existing
clients than it currently provides.
Commenting on the Acquisition, Lord Chadlington, Chairman of IPR,
said:
"We are delighted to have agreed terms with the Board of
Interpublic and look forward to becoming part of its global
communications business.
Our vision is to be the leader in global public relations and
reputation management. Being part of Interpublic is an ideal
strategic match for us since it will allow us to deepen and
expand our ability to serve clients in all parts of the world. We
are very excited by the future prospects of Interpublic and
believe the Acquisition will bring both immediate and long-term
benefits to our shareholders, our clients and our people."
Commenting on the Acquisition today, Philip H. Geier Jr.,
Chairman and Chief Executive Officer of Interpublic, made the
following statement:
"This agreement marks the continuation of Interpublic's
successful growth strategy to build incremental revenue streams
through diversification. By making Interpublic a leading player
in the fast growing public relations industry, the Acquisition
also provides our agencies' clients with an additional global
communications offering to meet their changing business needs.
Public relations is an increasingly vital strategic
communications resource to manage corporate reputations
worldwide."
Interpublic will incur expenses in its financial year 1998
resulting from charges associated with the Acquisition. Excluding
these expenses, the Interpublic Board expects the Acquisition to
be accretive to earnings per share of Interpublic Common Stock in
the financial year ending 31 December, 1998. This statement
should not be interpreted to mean that the future earnings per
share of Interpublic Common Stock will necessarily be greater
than the earnings per share of Interpublic Common Stock for its
most recent reported year, the financial year ended 31 December,
1997.
Shandwick, Golin/Harris and Weber will continue to be led by
their current management teams and will operate as autonomous,
independent organisations. A new board, representing each of the
three components, will be formed to serve as the decision-making
body on broad policy issues. This board, of which Lord
Chadlington will be Chairman and Chief Executive, will report to
the Interpublic Group.
Interpublic is one of the largest organisations of advertising
and marketing communications companies in the world. The
Interpublic Group employs more than 28,000 people in 120
countries worldwide. Interpublic's primary holdings include three
wholly-owned global advertising agency networks, McCann-Erickson
WorldGroup, Ammirati Puris Lintas and The Lowe Group, as well as
four specialised communication services units: Western
International
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Media, DraftWorldwide, The Allied Communications Group, Octagon
and other related companies.
IPR is the world's largest independent public relations firm with
82 offices in 21 markets and 41 affiliate offices in a further 29
markets. The IPR Group employs approximately 2,100 people. IPR
provides a full range of public relations services including
investor relations, support for consumer products, information
technology, financial communications, health and pharmaceutical
programmes, and global public relations services.
The Board of IPR today announced the interim results for the six
month period ended on 30 April, 1998 and full details are
provided in Appendix III. Operating income in the period was
(pound)60.1m (1997: (pound)60.1m), representing an increase of
3.2% in constant currencies. Profits were (pound)1.0m before
exceptional operating costs of (pound)4.4m, giving a pre-tax loss
of (pound)3.4m (1997: profit (pound)3.9m). In light of the
Acquisition the IPR Board has resolved not to pay an interim
dividend in respect of the six months ended 30 April, 1998.
ENQUIRIES
The Interpublic Group of Companies, Tel: (1-212) 399 8000
Philip H. Geier, Jr.
Chairman and CEO
Eugene P. Beard
Vice Chairman, Finance and Operations,
and CFO
Morgan Stanley Tel: (44-171) 425 5555
Piers de Montfort
Managing Director
Andrew Bell
Executive Director
International Public Relations plc Tel: (44-171) 408 2232
Lord Chadlington
Chairman and CEO
Philip Rogerson
Deputy Chairman
Lehman Brothers Tel: (44-171) 260 3026
Richard H. Collier
Managing Director
C. Simon A. Costa
Vice President
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This summary should be read in conjunction with the full text of
this announcement.
The conditions to the Acquisition are set out in Appendix II and
definitions of certain expressions used in this announcement are
set out in Appendix IV.
IPR's interim results are contained in Appendix III.
This announcement contains forward-looking statements including
with respect to the consummation of the Acquisition, the
integration of services and opportunities related to the
Acquisition. As such statements apply to future events, they are
subject to risks and uncertainties which may cause the actual
results to differ materially, including, without limitation, the
risk that the Acquisition will not be consummated, integration
risks related to the Acquisition and the risk that the
anticipated benefits of the Acquisition will not be realised.
This announcement is published on behalf of Interpublic and IPR
and has been approved by Morgan Stanley & Co. Limited and Lehman
Brothers International (Europe), each of which is regulated by
The Securities and Futures Authority Limited, solely for the
purposes of section 57 of the Financial Services Act 1986.
Lehman Brothers International (Europe), which is regulated by The
Securities and Futures Authority Limited, is acting for IPR and
no one else in connection with the Acquisition and will not be
responsible to anyone other than IPR for providing the
protections afforded to customers of Lehman Brothers
International (Europe), nor for providing advice in relation to
the Acquisition.
Morgan Stanley & Co. Limited, which is regulated by The
Securities and Futures Authority Limited, is acting for
Interpublic and no one else in connection with the Acquisition
and will not be responsible to anyone other than Interpublic for
providing the protections afforded to customers of Morgan Stanley
& Co Limited, nor for providing advice in relation to the
Acquisition.
This announcement does not constitute an offer or an invitation
to purchase any securities.
Copies of this announcement are not being, and must not be,
mailed or otherwise distributed or sent in or into Canada,
Australia or Japan and persons receiving this announcement
(including custodians, nominees and trustees) must not distribute
or send it into or from Canada, Australia or Japan.
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