The acquisition of True North Communications by the Interpublic Group of Companies [WAMN: 19-Mar-01] left investors in a decidedly cool mindset. Interpublic stock fell by over three per cent, $1.15 to $34.15 in afternoon trading, while True North shares shed 94 cents to $38.37.

The lack of enthusiasm for the $1.9 billion deal is attributed by some observers to the additional exposure it creates for Interpublic against the background of an advertising slowdown in the US and the decimation of internet start-up ad revenues.

But Interpublic says it has identified cost savings of $25m, claiming that the acquisition will enhance its earnings per share this year and next, after including near-term synergies. It is expected that the formalities will be complete by the summer.

Entrail-rakers and other speculators now have just two surviving global advertising ‘independents’ - Grey Advertising of the US and Britain's Cordiant Communications – on which to place their merger bets.

News source: Financial Times