Omnicom Buys Out Founders, Lays-Off 350 Staff

15 May 2001

A black day yesterday for New York-headquartered online shop

Part-owner Seneca – a newly formed holding company jointly owned by Omnicom and investor Pegasus Partners II LP – agreed to buy for cash the shares owned by agency founders Chan Suh and Kyle Shannon, upping its stake from 45.3% to a controlling 65.7%.

Seneca then announced plans to lay-off 25% of the payroll, some 350 employees. The moves are designed to return the agency to profit following the revelation earlier this month of a Q4 net cash loss of $4.7 million. The figure highlights the dramatic decline of the shop which posted a net cash profit of $593,000 for the same period a year previous. also revealed that Seneca has made a non-binding offer to acquire the balance of its stock for $3 a share. All the different elements of the deal are as yet unfinalized.

News source: Advertising Age - Interactive Daily