Interpublic Group has reached a pre-hearing legal accommodation with a group of disgruntled shareholders who accuse the agency holding company of misleading them over last year's $181.3 million (€148.88m; £104.87m) accounting imbalance. The federal lawsuit was filed in New York.
IPG -- the globe's second largest advertising group by 2002 billings -- is also poised to settle a similar state action brought in Chicago by former shareholders of True North, the agency group acquired by Interpublic in 2001.
The cost of settling both actions is thought to be in the region of $115 million, most of which ($95m) will be paid in shares, the balance in cash. To cover the payment in stock, a further 6.5 million Interpublic shares will be issued.
The company has already taken a charge of $127.6 million to cover legal liabilities related to the two actions plus another unrelated suit.
The accounting problems that triggered the actions were largely attributable to the multiple booking of revenue at the European offices of McCann-Erickson.
Data sourced from: AdWeek.com; additional content by WARC staff