French firm buys Snyder in stock deal; Havas Advertising to be 4th-largest marketing group; 'It's a very exciting event'; Transaction is worth $2.07 billion; Md. CEO to leave

France's Havas Advertising SA announced the purchase of Bethesda-based Snyder Communications Inc. yesterday in a stock deal worth $2.07 billion, making Havas the world's fourth-largest advertising group.

Snyder Chairman and Chief Executive Officer Daniel Snyder, who led a group of investors that bought the Washington Redskins last year, will leave the company after the transition is completed.


"It's a very exciting event for us," Snyder said. "We feel this is a tremendous opportunity. We've just created the fourth-largest marketing group in the world."

The new group ranks behind U.S. companies Omnicom Group Inc. and Interpublic Group of Companies Inc., and Britain's WPP Group PLC.


Industry analysts said the deal would give Havas, the sixth-largest global advertising company, a major presence in North America. Snyder, which ranks as the No. 11 company worldwide, has clients such as McDonald's, SBC Communications and Microsoft.

Snyder Communications said in December that it had retained Deutsche Banc Alex. Brown to explore strategic alternatives that included the possible sale of the company.

"We think that the industry is going to consolidate," Snyder said yesterday. "We see it coming. We want to be ahead of the trend."

Snyder said he thought there would soon be five very large marketing businesses worldwide.

As competition intensifies and growth slows in television and newspaper advertising, agencies are making acquisitions to strengthen their position in fast-growth areas, according to industry experts.

"We were very small in a quickly consolidating area," Snyder said.

"In this industry, if you don't make the acquisition, you are in danger of losing your clients to people who can offer them the service they want," said Lorna Tilbian, media analyst at WestLB Panmure in London.

"Havas were underrepresented in the U.S. market, and this is an attempt to rebalance their geographical exposure." Havas Advertising Chairman Alain de Pouzilhac said at a news conference yesterday in Paris that the two groups fit well together, with no conflict between clients.


"In terms of geographical fit, businesses, philosophy and clients, there was no more perfect marriage than this one," de Pouzilhac said. "There is not a single client conflict."

Snyder Communications, with 1998 revenue of $815.3 million, provides customer-relationship management, sales support and public relations services. The company's 1999 earnings have not been released.

The Snyder holding company includes Boston-based Arnold Communications; Bounty SCA Worldwide, a marketing services firm; Brann Worldwide, the world's largest direct marketing company; and, a publicly traded subsidiary involved in Internet advertising and commerce.

Combined, Havas and Snyder Communications will have more than 20,000 employees. Snyder has more than 5,700.

The new group will have a market capitalization of $6.42 billion and annual revenue of more than $19 billion. It will be 70 percent controlled by Havas shareholders and 30 percent by Snyder shareholders.

Buying Snyder, creator of the Volkswagen "Drivers Wanted," ads, which gave new life to the Volkswagen "Beetle," gives Havas the world's biggest direct-marketing company and a new Internet advertising unit.


The purchase gives the French company the chance to step up its presence in North America. It expects to nearly double its revenue from the United States, raising it from 30 percent to nearly 45 percent of overall sales.

The new company will make 60 percent of its sales from marketing services, such as direct marketing, and 40 percent from traditional advertising. Last year, Havas made about 55 percent of its revenue from traditional advertising.

Havas executives said they plan to save about $3 million by cutting jobs at Snyder Communications' Bethesda headquarters and another $2 million by refinancing $80 million in debt. Daniel Snyder said those cuts should only amount to "a handful" of jobs.

Snyder shareholders will receive $29.50 per share in American depositary receipts of Havas Advertising -- an amount 44 percent higher than Snyder's closing share price of $20.50 on Friday. U.S. stock markets were closed yesterday for Presidents Day.

Some analysts questioned the cost of the transaction and Havas' shares fell 33 euros, or 6.25 percent, to 495 euros ($488). But Snyder said he is optimistic the sale will be well-received. "We feel very comfortable that the reaction at the analyst and shareholder levels will be favorable," he said.