Japanese ad giant Dentsu breaks with Publicis, sells back 18m shares for €644.4 million

As anticipated, Publicis Groupe has purchased back a block of its own shares, which were held by Japanese advertising mammoth Dentsu. Publicis is putting 644.4 million euros on the table, which comes down to 35.8 euros per share.

The deal was financed with available cash, the communications juggernaut said.

Of the 18 million shares purchased, roughly 11 million shares will be immediately cancelled as unanimously agreed upon by its Management Board, Publicis said in a statement. A total 10 percent of the company’s shares – the maximum permitted by law – has now been cancelled, over the past 24 months.

The remaining shares from this transaction will be kept to “cover incentive plans for retention shares, performance shares, stock options and acquisitions”.

Under the terms of the agreement between Dentsu and Publicis, all commercial ties between the two companies have been effectively cut.

Dentsu and Publicis had maintained a capital and business alliance since September 2002, up until this transaction.

Dentsu says the “close commercial relationship” that it has built with Publicis over almost 10 years will continue into the future, however, and that it will proactively consider all opportunities for future collaboration.

Dentsu will continue to hold roughly 3.8 million Publicis shares (2 percent of shares outstanding prior to the sale, or 2.12 percent of the Publicis shares outstanding after the completion of the transaction and following the share cancellation).

Also worth pointing out: Dentsu says there will be no changes to the management structure or policies of the two joint ventures it established with Publicis in past times (Beacon Communications & Dentsu Razorfish, both headquartered in Tokyo).