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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 5)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
TRUE NORTH COMMUNICATIONS INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.33-1/3
(Title of Class of Securities)
897844 10 6
(CUSIP Number)
Thomas J. Kuhn, Esq.
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
(212) 841-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 19, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /
Check the following box is a fee is being paid with the statement / / (A fee is
not required only if the reporting: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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SCHEDULE 13D
CUSIP No. 897844 10 6 Page 2 of 5 Pages
1 NAMES OF REPORTING PERSON
Publicis Communication
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
This optional information has been excluded to maintain the filer's privacy
2 CHECK THE APPROPRIATE ROW IF A MEMBER OF A GROUP
(a)
(b)
3 SEC USE ONLY
4 SOURCES OF FUNDS
OO
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
NUMBER OF 7 SOLE VOTING POWER 4,658,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 4,658,000
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,658,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 19.6%
14 TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
CUSIP No. 897844 10 6 Page 3 of 5 Pages
1 NAMES OF REPORTING PERSON
Publicis S.A.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
This optional information has been excluded to maintain the filer's privacy
2 CHECK THE APPROPRIATE ROW IF A MEMBER OF A GROUP
(a)
(b)
3 SEC USE ONLY
4 SOURCES OF FUNDS
OO
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
NUMBER OF 7 SOLE VOTING POWER 4,658,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 4,658,000
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,658,000
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 19.6%
14 TYPE OF REPORTING PERSON
HC, CO
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CUSIP NO.897844 10 6 13D Page 4 of 5 Pages
This Amendment No. 5 to Schedule 13D (this "Amendment") with respect
to True North Communications Inc., a Delaware corporation (the "Company"), is
being filed on behalf of Publicis S.A., a societe anonyme organized and existing
under the laws of France ("Publicis") and Publicis Communication, a societe
anonyme organized and existing under the laws of France ("Communication")
(Publicis and Communication being hereinafter referred to collectively as the
"Reporting Persons"), to amend the Schedule 13D (the "Schedule 13D") originally
filed by the Reporting Persons on January 30, 1989, as amended to date. Unless
otherwise indicated, all capitalized terms used herein shall have the meanings
set forth in the Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Item 6 of Schedule 13D is hereby amended, in pertinent part, by
adding to the end thereof the following:
On February 19, 1997, the Reporting Persons and the Company entered
into a Memorandum of Agreement (the "Memorandum of Agreement"). The Memorandum
of Agreement establishes the principles and framework for the resolution of
existing disputes between the Company and the Reporting Persons. A copy of the
Memorandum of Agreement is attached hereto as Exhibit A and incorporated herein
by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibit is filed herewith:
Exhibit A - Memorandum of Agreement dated February 19, 1997 between Publicis
S.A. and True North Communications Inc.
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CUSIP NO.897844 10 6 13D Page 5 of 5 Pages
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated as of: February 20, 1997
PUBLICIS S.A.
By: /s/ Maurice Levy
-----------------------------
Maurice Levy,
President
PUBLICIS COMMUNICATION
By: /s/ Jean-Paul Morin
-----------------------------
Jean-Paul Morin,
Secretaire General
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EXHIBIT INDEX
Exhibit No. Description
99.A Memorandum of Agreement dated February 19, 1997
between Publicis S.A. and True North Communications Inc.
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EXHIBIT A
MEMORANDUM OF AGREEMENT
This is a Memorandum of Agreement (this "Agreement") dated February 19, 1997
among Publicis S.A., Publicis Communication, and Publicis-FCB Europe
(collectively, "Publicis"), on the one hand and True North Communications Inc.,
Foote, Cone & Belding Communications Inc. and FCB International, Inc.
(collectively, "True North"), on the other hand, with respect to the following
matters:
1. Publicis and True North agree to resolve all of the outstanding
disputes between them upon the terms set forth in this Agreement.
2. (a) Publicis and True North agree to create two separate agency
networks, one owned and controlled by Publicis and the other
owned and controlled by True North. The two networks would each
have the capacity to offer to their respective clients top
quality service and would each have the ability to function
globally and independently of one another.
(b) As between Publicis and True North, True North will be the sole
owner of and have the sole right to use the names "Foote, Cone
and Belding" and "FCB" throughout the world, and Publicis will
be the sole owner of and have the sole right to use the name
"Publicis" throughout the world.
3. (a) Within sixty days following the execution of this Agreement,
Publicis agrees to sell, transfer and assign to True North all
of the interests held by Publicis in the following four
agencies: FCB London, FCB Paris, FCB Lisbon and Gnomi FCB
Athens. In 1996, these four agencies represented approximately
US$42 million in revenue and US$4.8 million in net profit (after
tax and management fees).
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(b) Simultaneously with the transactions described in the
immediately preceding paragraph 3(a) Publicis agrees to merge or
otherwise combine the operations of Publicis-FCB Europe and
Publicis Communication.
(c) Following that merger and the transfer of the FCB agencies, True
North will no longer have a direct interest in Publicis-FCB
Europe and will own 26.5 per cent of the combined entity.
4. (a) True North authorizes and consents to any and all transactions
designed to combine or merge Publicis Communication with
Publicis-FCB Europe under the terms of this Agreement, and to
any and all transactions designed to transfer the Publicis
global agency network owned by Publicis S.A. so that such global
network is owned by Publicis Communication. In connection with
the current restructuring, it is agreed that all of the material
transactions between Publicis Communication and Publicis S.A.
will be done on an arm's length basis.
(b) After this restructuring, Publicis Communication will be the
holding company of the worldwide network for Publicis, and all
other agencies already owned by Publicis S.A. will be merged
with Publicis Communication. True North authorizes and consents
to any and all transactions intended to achieve that objective.
(c) If, at any time, Publicis Communication issues equity in a
transaction that results in True North's owning less than 20 per
cent of Publicis Communication, and the shares of Publicis
Communication are not then listed on a major European stock
exchange, Publicis agrees that it shall use its best efforts to
cause to be listed (within 120 days following the date on which
True North owns less than 20 per cent of Publicis Communication)
on a major European stock exchange the equity of Publicis
Communication.
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The offering and listing, if any, of Publicis Communication
shares shall be carried out such that True North shall be
permitted to sell at least 50 per cent of the shares of
Publicis Communication held by it immediately prior to the
consummation of the offering.
If the listing of Publicis Communication has not occurred on or
prior to the 120th day following the date on which True North
owned less than 20 per cent of Publicis Communication, True
North will have the right, at its sole discretion, to sell 100
per cent of the shares of Publicis Communication then owned by
it to Publicis S.A. Of those shares, 75 per cent shall be
purchased at the fair market value of the block of shares sought
to be sold by True North, as established pursuant to the
procedures set forth in the last two sentences of the first
paragraph of Section 12 of this Agreement, and 25 per cent shall
be purchased at the price that would result from the application
of the formula set forth in the second paragraph of Section 12
of this Agreement.
(d) If the listing of Publicis Communication has not yet occurred as
of the date that True North's ownership of Publicis
Communication is diluted below 20 per cent, True North may, in
its sole discretion, notify Publicis that it elects to maintain
its 20 percent ownership of Publicis Communication rather than
sell in a public offering (or to Publicis) as contemplated by
paragraph 4(c) of this Agreement. If True North so notifies
Publicis, the provisions of paragraph 4(c) of this Agreement
shall not apply as to the particular event that would have
diluted True North's ownership of Publicis Communication below
20 percent, and True North shall have the right to purchase
sufficient additional shares of Publicis Communication so that
it maintains its 20 per cent ownership thereof. If the listing
of Publicis Communication has not yet occurred as of the date
that True North's ownership of Publicis Communication is diluted
below 20 per cent, True North's discretion to elect either
paragraph 4(c) or 4(d)
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under this Agreement shall apply to successive subsequent events
that would dilute True North's interest in Publicis
Communication below 20 per cent.
The per share price to be paid by True North for such additional
shares shall be the fair value of the per share consideration
received by Publicis in connection with the event that caused
True North's ownership to be diluted below 20 per cent.
(e) As long as True North owns 10 percent or more of Publicis
Communication, Publicis Communication will provide all financial
and other information reasonably requested by True North for
purposes of True North's compliance with U.S. income tax laws
and other U.S. regulatory requirements, will cause its
independent auditors to complete their annual audit and provide
the results to True North before February 15 each year, and will
provide True North with unaudited quarterly consolidated
financial results before April 30, July 30, and October 30 each
year.
(f) As long as Publicis owns 10 percent or more of True North, True
North will provide all financial and other information
reasonably requested by Publicis for purposes of Publicis'
compliance with French and European income tax laws and other
French and European regulatory requirements, will cause its
independent auditors to complete their annual audit and provide
the results to Publicis before February 15 each year, and will
provide Publicis with unaudited quarterly consolidated financial
results before April 30, July 30, and October 30 each year.
5. Publicis authorizes and consents to any and all transactions by
True North in Europe designed to establish an independent True North
network in Europe.
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6. Subject to controlling local law and existing contractual
obligations, True North agrees to sell, transfer and assign to
Publicis its entire 6 per cent equity stake in "Park Advertising
Pty" which owns 100 per cent of the "Partnership" agency in South
Africa, and True North will use its best efforts to assist in the
transfer of Park Advertising Pty shares to Publicis by third
parties.
7. Subject to controlling local law and existing contractual
obligations and within sixty days following the execution of this
Agreement, True North agrees to use its best efforts to create, or
to enter into agreements to create, separate agencies (which shall
be spun-off from existing True North agencies) which will handle the
Nestle and L'Oreal accounts in Thailand, India and Argentina. These
new agencies shall be spun-off from the Prakit agency in Thailand,
the Ulka agency in India and the Pragma agency in Argentina.
Immediately following the spin-off of these newly-created agencies,
True North will exercise its best efforts to have the other
shareholders in these agencies sell, transfer and assign to Publicis
not less than a controlling stake in each spun-off agency.
8. Within sixty days following the execution of this Agreement, True
North agrees to sell, transfer and assign to Publicis not less than
a majority stake in the Mojo agency in each of Australia and New
Zealand. True North also agrees to sell, transfer and assign to
Publicis all the shares that True North owns in BMZ Germany.
9. The sale of stakes agreed in paragraphs 6, 7 and 8 of this
Agreement will be made by True North (or other shareholders) in
exchange for payments by Publicis. For each stake so purchased,
Publicis agrees to pay True North the appropriate pro rata share of
(i) the net equity of the entity being purchased as at December 31,
1996 and (ii) a negotiated amount not exceeding 75 per cent of the
revenue of each such entity in fiscal year
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1996. The sale price for the spun-off agencies contemplated by
Section 7 of this Agreement shall be based on pro forma net equity
and revenue amounts for fiscal year 1996.
10. (a) Although the amount of any fees due and owing is in dispute, as
a demonstration of goodwill, as a condition to closing the
transaction contemplated in paragraph 3 herein, True North
agrees to pay to Publicis all amounts due to Publicis with
respect to "coordination and development fees". Such amounts
accrued to date for the years 1992, 1993, 1994 and 1995 total
US$2.3 million.
(b) True North and Publicis further agree to pay regularly when due
all future coordination fees of one per cent of billings for
qualified international accounts.
11. Publicis agrees to use its best efforts to cause to be listed on a
major European stock exchange the equity of Publicis Communication
prior to December 31, 1998. Publicis agrees to seek to cause such
listing to occur in 1997. The offering and listing of Publicis
Communication shares shall be carried out such that True North shall
be permitted to sell in any such offering at least 50 per cent of
the shares of Publicis Communication held by it immediately prior to
the consummation of the offering. The intention of the parties is to
provide True North with a means of selling its stake in Publicis
Communication in a public market.
12. If the listing of Publicis Communication has not occurred on or
prior to December 31, 1998, True North will have the right, at its
sole discretion, to sell up to 20 per cent of the shares of Publicis
Communication to Publicis S.A. at the fair market value of the block
of shares sought to be sold by True North. The fair market value to
be paid by Publicis S.A. will be established within 60 days of True
North's requesting an appraisal by a panel consisting of three
globally-recognized investment banks. One of
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said banks shall be appointed by Publicis, one by True North and the
third shall be agreed and appointed by the two banks previously
selected by each of the parties.
For the remaining shares held by True North (6.5 per cent) in
Publicis Communication, a put and call option exercisable at any
time up to March 31, 1999 will be granted to True North and Publicis
respectively at a price that would result from the application of
the following formula for determining the total value of Publicis
Communication: the sum of (1) the average of (a) 60 per cent of the
revenue for the immediately preceding two full calendar years and
(b) eleven times net income (after tax and before goodwill
amortization) for the immediately preceding two full calendar years
and (2) net tangible assets (net equity less intangible assets).
13. Both parties agree to continue their collaboration by entering into
an agreement to service their respective clients in the countries
where either of the parties is not yet established. This agreement
will have a three-year term, and will be renewable by either party
for one additional three-year term.
14. Those clients of one of the parties handled by the other party in
the prior "spheres of influence" under the Alliance, will be
transferred to the party having the worldwide agreement with the
clients concerned. Such transfer will be effected as promptly as
possible after the relevant party has at its disposal agencies
capable of serving the transferred clients. The relevant employees
will be given the opportunity to move to the other agency.
15. The two parties agree to explore the possibility of creating a
common media-buying company on a global basis or some other means of
cooperating on the buying of media space worldwide, which would
provide media-buying services for Publicis in the United States and
for True North in Europe.
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16. Simultaneously with the execution of the definitive agreements,
both parties agree to irrevocably terminate any adversarial
proceedings between them, including any present or future litigation
or arbitration which arises out of events occurring prior to the
date of such definitive agreements.
17. This Agreement is subject to the approval of the Boards of Directors
of each Publicis S.A. and True North Communications Inc. No public
announcement or other disclosure of this Agreement or the terms
hereof will be made until the Boards of Directors of each Publicis
S.A. and True North Communications Inc. shall have approved this
Agreement.
18. Except as to those public disclosures required by law, the parties
shall agree in advance on any and all communication or release of
information concerning this Agreement to third parties. The parties
will use best efforts to coordinate and exchange in advance proposed
communications required by law. After execution of this Agreement,
neither party will publicly criticize the other and/or any actions
taken by the other party.
19. Due to the complexities of the transactions contemplated in this
Agreement it is not possible at this time for the parties to prepare
and execute the definitive documentation concerning all the
agreements set forth herein. The parties understand and agree that
the transactions referred to herein are mutually dependent on each
other and that certain of such transactions will require the
execution of definitive legal documents. The parties intend,
nonetheless, that (x) the agreements set forth in paragraphs 3, 4,
5, 6, 7, 8, 9, 10, 11, 12, 14, 17, 18, 21, 22, and 24 hereof shall
constitute binding legally enforceable agreements of each of
Publicis and True North, and (y) that the definitive legal documents
will be negotiated in good faith and will be based on the agreed
principles set forth herein.
20. The parties acknowledge and agree that the transactions
contemplated by paragraphs 3, 6, 7, 8, 9 and 10(a) of this Agreement
shall, to the extent
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practicable, be consummated simultaneously. If such transactions
cannot reasonably be completed contemporaneously, the parties agree
that they will enter into escrow or other similar arrangements
intended to effect a simultaneous closing.
21. So long as True North is a 10 per cent or greater stockholder of
Publicis Communication any significant transactions effected by
Publicis Communication shall be on an arm's length basis, except for
the merger or other combination of Publicis-FCB Europe and Publicis
Communication.
As soon as practicable, but no later than sixty days after
execution of the definitive documentation concerning the agreements
set forth herein, as long as True North owns 10 percent or more of
Publicis Communication, and before any transaction to transfer
Publicis S.A. agencies to Publicis Communication, Publicis
Communication will have three members of its Board of Directors who
have no prior significant relationship with Publicis, True North or
the directors or senior officers of either. Publicis Communication
will consult with True North prior to the appointment of the three
independent directors. A majority of the three independent directors
must approve any transaction (other than those specifically
contemplated by this Agreement) of Publicis Communication, including
transactions with Publicis S.A. or affiliates of Publicis S.A. that
a majority of them deem significant.
A party owning 18 per cent or more of the outstanding voting stock
of the other party shall be entitled to be represented on the board
of the other party under circumstances that recognize that each may
have information that should be kept confidential from the other.
22. With respect to any transaction preceding the completion of the
initial public offering, concerning the acquisition by Publicis
Communication of any entity or interest therein presently owned by
Publicis S.A. or acquired
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by Publicis S.A. before the formation of the entity combining
Publicis-FCB Europe and Publicis Communication, True North shall
have the right to maintain its 26.5 per cent interest in such entity
by contributing 26.5 per cent of Publicis Communication's actual
cost of any such acquisitions financed through the issuance of
Publicis Communication stock by purchasing Publicis Communication
stock for cash on the same valuation basis as in the transaction
that resulted in the dilution of such 26.5 per cent interest.
23. It is the parties' understanding that the concurrence of a client
to a transfer of its account from one agency to another is the way
the advertising business works (and it is parties' assumption that
neither party will attempt to obstruct such concurrence).
24. For a period of three years after the signing of the definitive
documentation concerning the agreements set forth herein, as long as
Publicis owns 10 per cent or more of True North's stock, Publicis,
within 30 days after receiving a written request from True North,
will furnish True North with a pooling letter, in a conventional
form, and, if reasonably requested, will take such other action in
support of the transaction (other than a commitment to vote for the
transaction) as would be customary with respect to an acquisition or
other similar business transaction in which True North may
participate, provided that the pooling letter may be withdrawn if
any of the following conditions is not met within ninety days after
the pooling letter has been furnished:
(a) True North has obtained a fairness opinion from a
nationally-recognized investment bank with regard to the
contemplated transaction;
(b) A majority of the outside directors of True North has voted to
approve the terms and conditions of the contemplated
transaction; and
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(c) True North has obtained pooling letters (or similar action) by
all other non-deminimis affiliates of True North.
Not later than ninety days after Publicis has furnished the pooling letter, True
North shall call a meeting of the True North shareholders, to be held within a
further sixty days, to vote on the contemplated transaction. If a majority vote
of the outstanding shares of True North in favor of the contemplated transaction
is not obtained at such meeting, Publicis may withdraw its pooling letter.
The obligation of Publicis to furnish a pooling letter pursuant to this
paragraph shall expire at the end of the earlier of (a) True North's successful
completion of a significant transaction involving the pooling method of
accounting or (b) three years after the signing of the definitive documentation
concerning the agreements set forth herein.
TRUE NORTH COMMUNICATIONS INC. PUBLICIS S.A.
By: /s/ Bruce Mason By: /s/ Maurice Levy
------------------------ -----------------------
Bruce Mason Maurice Levy
By: /s/ Stephen T. Vehslage
-------------------------------
Stephen T. Vehslage
11
