Filed by Publicis Groupe S.A.
pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Bcom3 Group, Inc.
Commission File No. 333-87600
[Publicis Groupe S.A. Logo]
SUMMARY TRANSLATION TO THE ADR HOLDERS
OF THE MAIN INFORMATION PROVIDED TO THE
SHAREHOLDERS OF PUBLICIS
This document is a summary of the Note d'Operation (prospectus) approved by the
Commission des Operations de Bourse on May 16, 2002. The entire text of the Note
d'Operation is available upon request from Publicis Groupe S.A. (133, avenue des
Champs Elysees, 75008 Paris, attention Pierre Benaich, tel. +33 1 44 43 74 11)
and is also available on the internet at www.publicis.com.
This summary highlights selected information from the Note d'Operation and has
been prepared for the attention of the holders of Publicis ADR only in
connection with the extraordinary Publicis shareholders meeting to be held on
June 18, 2002. This summary has been prepared solely for the convenience of the
Publicis ADR holders and may not be used or relied upon by any other persons or
for any other purpose. Publicis expressly disclaims any responsibility on the
grounds that any information contained in this summary is not complete or
correct. You are encouraged to read in full the Note d'Operation (prospectus)
which constitutes the legal document required under the laws of France in
connection with the Publicis Extraordinary Shareholders Meeting.
For detailed information about the Publicis/Bcom3 merger, please see French
prospectus number 02-564 filed with the French Commission des Operations de
Bourse on May 16, 2002, available from Publicis (133, avenue des Champs Elysees,
75008 Paris, attention Pierre Benaich, tel. +33 1 44 43 74 11) and on the
internet at www.publicis.com.
TABLE OF CONTENT
1. DESCRIPTION OF THE MERGER...............................................3
1.1 DESCRIPTION OF THE TRANSACTION...................................3
1.2 THE PUBLICIS/BCOM3 MERGER........................................3
1.3 PUBLICIS/BCOM3 MERGER CONSIDERATION..............................4
1.4 TRANSFER RESTRICTIONS ON PUBLICIS SECURITIES ISSUED IN
CONNECTION WITH THE PUBLICIS/BCOM3 MERGER........................5
1.4.1 Transfer Restrictions Applicable to Former Class A
Stockholders..............................................5
1.4.2 Transfer Restrictions Applicable to Dentsu................6
1.5 OTHER INFORMATION RELATED TO THE PUBLICIS/BCOM3 MERGER -
RECOMMENDATION BY THE BOARDS - SHAREHOLDERS MEETING..............6
1.6 CONDITIONS TO COMPLETION OF THE PUBLICIS/BCOM3 MERGER............6
1.6.1 Conditions to Each Party's Obligations to effect the
Publicis/Bcom3 Merger.....................................6
1.6.2 Conditions to the Obligations of Publicis.................7
1.6.3 Conditions to the Obligations of Bcom3....................7
1.7 TERMINATION OF THE PUBLICIS/BCOM3 MERGER AGREEMENT...............8
1.8 TERMINATION FEE..................................................8
1.9 SHAREHOLDERS AGREEMENTS..........................................9
1.9.1 Shareholders' Agreement between Publicis and Dentsu.......9
1.9.2 Shareholders' Agreement between Elisabeth Badinter
and Dentsu...............................................10
1.10 ALLIANCE AGREEMENT BETWEEN PUBLICIS AND DENTSU..................12
1.11 INDEMNIFICATION.................................................12
2. KEY INFORMATION ON THE MERGER..........................................14
2.1 RATIONALE OF THE MERGER.........................................14
2.2 INDEPENDENT APPRAISERS' OPINION.................................17
3. CONSEQUENCES OF THE MERGER FOR PUBLICIS SHAREHOLDERS...................19
3.1 PRO-FORMA SHAREHOLDING..........................................19
3.2 PUBLICIS PROFORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION..21
3.2.1 Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 2001.................................21
3.2.2 Unaudited Pro Forma Condensed Consolidated Income
Statement for the year ended December 31, 2001...........22
3.2.3 NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION.......23
4. DESCRIPTION OF PUBLICIS EQUITY ISSUE...................................27
5. DESCRIPTION OF ORAS....................................................29
6. DESCRIPTION OF OBSAS...................................................34
7. DESCRIPTION OF PUBLICIS................................................39
8. DESCRIPTION OF BCOM3...................................................40
1. DESCRIPTION OF THE MERGER
1.1 DESCRIPTION OF THE TRANSACTION
On March 7, 2002, Publicis, Philadelphia Merger Corp. and Philadelphia
Merger LLC, both Delaware corporations and newly formed wholly-owned
subsidiaries of Publicis, and Bcom3 entered into an Agreement and Plan of
Merger (the "Publicis/Bcom3 merger agreement") providing for the merger
of Bcom3 with and into Philadelphia Merger Corp. (the "Publicis/Bcom3
merger"). Upon the closing of the Publicis/Bcom3 merger, Bcom3 will cease
to exist and Philadelphia Merger Corp. will be the surviving corporation.
Bcom3 is a corporation organized under the laws of Delaware. Its share
capital is currently held by Class A shareholders (78.1%) who are former
or present employees of Bcom3, and by one Class B shareholder, Dentsu
Inc., a Japanese corporation ("Dentsu"), which holds 21.9% of Bcom3's
share capital.
As a first step to the Publicis/Bcom3 merger, on March 7, 2002, Bcom3,
Boston Three Corporation, a wholly owned subsidiary of Bcom3, and Dentsu
entered into a merger agreement. Pursuant to this merger agreement,
Boston Three Corporation will merge with and into Bcom3 and Dentsu will
pay approximately $498.7 million in cash to the holders of Bcom3 Class A
common stock (the "first step merger"). Upon completion of this first
step merger, Dentsu will own approximately 7,134,601 shares of Class B
common stock, and Class A common stockholders will collectively own
approximately 12,440,075 shares of Class A common stock. It is expected
that the first step merger will occur immediately prior the
Publicis/Bcom3 merger.
1.2 THE PUBLICIS/BCOM3 MERGER
o At the closing of the Publicis/Bcom3 merger, Bcom3 will merge with
and into Philadelphia Merger Corp., and Publicis will issue
56,250,000 new ordinary shares, 1,562,500 obligations
remboursables en actions nouvelles ou existantes ("ORAs") and
2,812,500 obligations a bons de souscription d'actions ("OBSAs"),
which consist of notes with detachable warrants as described in
more detail under "1.3 Publicis/Bcom3 Merger Consideration." For a
description of these securities see sections 4, 5 and 6 below.
o Approximately 6,827,985 ordinary shares to be issued in the
Publicis/Bcom3 merger will be subject to a special arrangement
providing for the separation of the bare legal title (i.e. voting
rights) and the usufruct interest. For a period of two years
following the closing date of the Publicis/Bcom3 merger, Class A
stockholders will obtain the right to receive the usufruct
interest in such shares, while Dentsu will obtain the right to
receive the bare legal title in these shares.
o Upon the closing of the Publicis/Bcom3 merger, the warrants that
form part of the OBSAs will be detached from the OBSAs and will be
distributed to the Bcom3 stockholders as part of the merger
consideration. With regard to the debt portion of the OBSAs (also
referred to herein as the "notes"), Bcom3 will appoint a marketing
agent to sell the notes and to distribute the net proceeds from
such sale (net of fees
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and expenses of the sale and the cash to be used to pay out to the
outstanding Bcom3 stock options in connection with the merger) to
the former Bcom3 stockholders.
o Upon the closing of the Publicis/Bcom3 merger, Dentsu will hold
approximately 15% of the voting rights of Publicis and will be one
of Publicis's major shareholders.
As part of the Publicis/Bcom3 merger, Dentsu will enter into the
following agreements:
- a shareholders agreement with Publicis;
- a shareholders agreement with Ms. Elisabeth Badinter;
- an alliance agreement with Publicis.
1.3 PUBLICIS/BCOM3 MERGER CONSIDERATION
Upon completion of the Publicis/Bcom3 merger, each share of Class A
common stock of Bcom3 will be converted into the right to receive:
- 1.666464 Publicis ordinary shares, which are described under
Section 5 "Description of Publicis Equity Issue";
- the usufruct interest (usufruit) in 0.548870 additional Publicis
ordinary shares, together with the right to receive bare legal
title to these shares on the second anniversary of the closing
date of the Publicis/Bcom3 merger;
- 0.098108 ORAs; and
- 1.765944 warrants (detached from the OBSAs) to purchase Publicis
ordinary shares (each warrant is exercisable for one Publicis
ordinary share), as well as the net cash proceeds from the sale of
0.1765944 notes detached from the OBSAs.
Each share of Class B common stock of Bcom3 outstanding after the
consummation of the first step merger (all of which is and will be held
by Dentsu) will be converted into the right to receive:
- 4.021399 Publicis ordinary shares;
- bare legal title (nue-propriete) to 0.957024 additional Publicis
ordinary shares until the second anniversary of the closing date
of the Publicis/Bcom3 merger;
- 0.047940 ORAs; and
- 0.862911 warrants (detached from the OBSAs) to purchase Publicis
ordinary shares (each warrant is exercisable for one Publicis
ordinary share), as well as the net cash proceeds from the sale of
0.0862911 notes detached from the OBSAs.
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1.4 TRANSFER RESTRICTIONS ON PUBLICIS SECURITIES ISSUED IN CONNECTION WITH
THE PUBLICIS/BCOM3 MERGER
1.4.1 TRANSFER RESTRICTIONS APPLICABLE TO FORMER CLASS A STOCKHOLDERS
o The Publicis ordinary shares, usufruct interests, ORAs and
warrants to be issued to Class A stockholders in the
Publicis/Bcom3 merger will become transferable as follows:
o tranches of 25% of the total number of Publicis ordinary
shares and usufruct interests in Publicis ordinary shares
issued to Class A stockholders will become transferable at
the end of each of the 6-,12-,18- and 24-month periods
following the closing of the Publicis/Bcom3 merger
(Publicis ordinary shares will become transferable first,
then the usufructs will become transferable after the 24th
month);
o tranches of 25% of the total number of ORAs issued to Class
A stockholders will become transferable at the end of each
of the 30-, 36-, 42- and 48-month periods following the
closing of the Publicis/Bcom3 merger; and
o tranches of 25% of the total number of warrants issued to
all former Class A stockholders will become transferable at
the end of each of the 30-,36-,42-and 48-month periods
following the effective time of the Publicis/Bcom3 merger.
o Any sale by a former Class A stockholder of Publicis securities in
the public market after expiration of the applicable lock-up
periods described above will need to comply with orderly marketing
procedures. This will involve the use of a polling agent to
determine the selling interest of Bcom3 stockholders on a monthly
basis. If the total amount of securities requested to be sold on
the public markets in any month represents an equivalent of less
than 1.4 million ordinary shares, these securities may be freely
sold on the public markets by the Class A stockholders during that
period. Otherwise the sale will be made through a process managed
by investment banks.
o If an "active public market" exists for the ORAs and
warrants that the Class A stockholders are willing to sell,
Publicis has a right of first refusal to purchase, in whole
or in part, any ORAs or warrants at the official closing
price of the security on Euronext on the date the right of
first refusal is exercised, subject to any minimum sales
price indicated by each stockholder.
o If no "active public market" exists for the ORAs and
warrants that the Class A stockholders are willing to sell,
Publicis will have the right to make an offer to the former
Class A Stockholders to purchase their ORAs and warrants at
a specified price. If a stockholder does not accept
Publicis's offer, he or she may sell the securities subject
to such offer provided that the stockholder sells such
securities in compliance with the above terms, at a higher
price than Publicis's offer.
o These orderly marketing procedures will cease to apply to
the ordinary shares on the 30-month anniversary of the
closing date of the mergers and to the
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ORAs and warrants on the 54-month anniversary of the
closing date of the mergers.
1.4.2 TRANSFER RESTRICTIONS APPLICABLE TO DENTSU
For a description of the transfer restrictions applicable to the Publicis
ordinary shares and other Publicis securities to be received by Dentsu in
the Publicis/Bcom3 merger, see paragraph 1.9.
1.5 OTHER INFORMATION RELATED TO THE PUBLICIS/BCOM3 MERGER - RECOMMENDATION
BY THE BOARDS - SHAREHOLDERS MEETING
Each of the Management Board and Supervisory Board of Publicis
unanimously approved the Publicis/Bcom3 merger agreement and
Publicis/Bcom3 merger and recommends that the Publicis shareholders vote
in favor of the Publicis/Bcom3 merger agreement. Bcom3's board of
directors agreed to call and hold a meeting of its shareholders as
promptly as practicable for the purpose of voting upon the Publicis/Bcom3
merger agreement and the transactions contemplated thereby. Publicis and
Bcom3 will use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption of the Publicis/Bcom3
merger agreements and approval of the first step merger and the
Publicis/Bcom3 merger, and related matters.
1.6 CONDITIONS TO COMPLETION OF THE PUBLICIS/BCOM3 MERGER
The closing of the Publicis/Bcom3 merger will take place as soon as
practicable, but in any event within three business days after the
satisfaction or waiver of the closing conditions described below.
1.6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE PUBLICIS/BCOM3
MERGER
The obligations of each party to complete the Publicis/Bcom3 merger are
subject to the satisfaction or waiver of various conditions including:
o the United States registration statement of which the proxy
statement forms a part has been declared effective by the
Securities and Exchange Commission (the "SEC") under the United
States Securities Act of 1933, as amended (the "Securities Act")
and no stop order suspending the effectiveness of the registration
statement has been issued and no proceeding for that purpose has
been initiated by the SEC;
o Bcom3 and Publicis stockholder approval of the Publicis/Bcom3
merger and related resolutions submitted the respective
stockholders has been obtained;
o no governmental entity or court has issued any law, judgment or
order which would make the merger illegal or otherwise prohibit
the completion of the transaction;
o antitrust and other regulatory approvals have been obtained,
except for such approvals the failure of which to obtain should
not have, and could not reasonably be expected to have, a material
adverse effect; and
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o the first step merger has been completed on substantially the
terms set forth in the first step merger agreement.
1.6.2 CONDITIONS TO THE OBLIGATIONS OF PUBLICIS
The obligations of Publicis and Philadelphia Merger Corp. to complete the
Publicis/Bcom3 merger are subject to the satisfaction or waiver of
additional conditions, including:
o the representations and warranties of Bcom3 contained in the
Publicis/Bcom3 merger agreement are true and correct as of the
effective time, except where the failure to be so true and correct
(without giving effect to any qualification as to "materiality" or
"material adverse effect" set forth therein) would not have or
could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on Bcom3;
o material compliance by Bcom3 with its obligations under the
Publicis/Bcom3 merger agreement on or prior to the effective time,
except where the failure to so comply would not have or could not
reasonably be expected to have, individually or in the aggregate,
a material adverse effect on Bcom3; and
o the holders of not more than 5% of outstanding Bcom3 common stock
having exercised their appraisal rights under Delaware law.
o receipt by Publicis and Bcom3 of the opinion of Kirkland & Ellis,
dated as of the date of the Publicis/Bcom3 merger agreement and
the closing date of the mergers, relating to specific matters
associated with the stock purchase agreements between Bcom3 and
its Class A stockholders and the ownership of Bcom3 common stock
by the persons who entered into the stock purchase agreements.
1.6.3 CONDITIONS TO THE OBLIGATIONS OF BCOM3
The obligations of Bcom3 to complete the Publicis/Bcom3 merger are
subject to the satisfaction or waiver of the additional conditions,
including:
o the representations and warranties of Publicis and Philadelphia
Merger Corp. contained in the Publicis/Bcom3 merger agreement are
true and correct as of the effective time, except where the
failure to be so true and correct (without giving effect to any
qualification as to "materiality" or "material adverse effect" set
forth therein) would not have or could not reasonably be expected
to have, individually or in the aggregate, a material adverse
effect on Publicis; and
o material compliance by Publicis and Philadelphia Merger Corp. with
their obligations under the Publicis/Bcom3 merger agreement on or
prior to the effective time, except where the failure to so comply
would not have or could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on
Publicis.
o receipt by Bcom3 of the opinion of Kirkland & Ellis, dated as of
the closing date of the Publicis/Bcom3 merger, to the effect that
for U.S. federal income tax purposes the Publicis/Bcom3 merger
will qualify as a reorganization within the meaning of Section
368(a) of the U.S. Internal Revenue Code(the "Code"); and each
transfer of property to Publicis by a Bcom3 stockholder pursuant
to the Publicis/Bcom3 merger will not be subject to Section
367(a)(1) of the Code.
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1.7 TERMINATION OF THE PUBLICIS/BCOM3 MERGER AGREEMENT
The Publicis/Bcom3 merger agreement may be terminated and the
Publicis/Bcom3 merger and the other transactions contemplated by the
Publicis/Bcom3 merger agreement may be abandoned at any time prior to the
effective time of the Publicis/Bcom3 merger, notwithstanding any
requisite approval of the Publicis/Bcom3 merger agreement and the other
transactions contemplated by the Publicis/Bcom3 merger agreement:
o by mutual written consent of Bcom3 and Publicis;
o by either Bcom3 or Publicis if:
- the Publicis/Bcom3 merger has not been completed by
September 7, 2002, which is the outside date; provided,
however, that if (1) the Publicis/Bcom3 merger has not been
completed by that date because any governmental orders and
consents, including antitrust approvals, have not been
obtained; and (2) all other conditions have been satisfied
or waived or are capable of being satisfied, this outside
date will be extended to December 7, 2002;
- if there is an order that is final and nonappealable
preventing the completion of the Publicis/Bcom3 merger;
- the stockholders of Bcom3 fail to approve the
Publicis/Bcom3 merger agreement at the Bcom3 special
stockholder meeting;
- the shareholders of Publicis fail to approve the Publicis
proposals at the Publicis extraordinary shareholder
meeting; or
- upon a breach of any material representation, warranty,
covenant or agreement of Publicis or Bcom3, as the case may
be, under the Publicis/Bcom3 merger agreement.
- if Publicis' or Bcom3 board(s), as the case may be, (1)
withdraws, modifies or changes its recommendation of the
Publicis/Bcom3 merger agreement or the transactions
contemplated by the Publicis/Bcom3 merger agreement; (2)
shall have recommended to the shareholders of Publicis a
competing transaction or shall have resolved to do so; or
(3) a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of either Publicis or
(Bcom3) is commenced, and the board(s) of Publicis (or
Bcom3) fails to recommend against acceptance of such tender
offer or exchange offer by its shareholders (including by
taking no position with respect to the acceptance of such
tender offer or exchange offer by its shareholders).
1.8 TERMINATION FEE
Publicis or Bcom3, as the case may be, will be required to pay the other
party a termination fee of $90 million under certain circumstances,
including:
- Publicis or Bcom3, as the case may be, terminates the
Publicis/Bcom3 merger agreement because (1) the Bcom3 board or one
of the Publicis boards, as the case may be, withdraws, modifies or
changes its recommendation of the Publicis/Bcom3 merger agreement
or the transactions contemplated by the Publicis/Bcom3 merger
agreement in a manner adverse to Publicis or Bcom3, as the case
may be; or (2) theBcom3 board or one of the Publicis boards, as
the case may be, shall have recommended to its stockholders a
competing transaction or shall have resolved to do so; or (3) a
tender offer or exchange offer for 50% or more of the outstanding
shares of capital stock of Bcom3 or Publicis, as the case may be,
is commenced, and
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the concerned board fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders.;
- (1) Publicis or Bcom3 terminates the Publicis/Bcom3 merger
agreement due to the failure of the Bcom3 stockholders, or the
Publicis stockholders, as the case may be, to approve the
Publicis/Bcom3 merger agreement, (2) prior to the time the
Publicis or Bcom3 stockholders fail to approve the Publicis/Bcom3
merger agreement there has been made a proposal for a competing
transaction with respect to Bcom3 or Publicis, as the case may be,
and (3) within 12 months of the termination of the Publicis/Bcom3
merger agreement Bcom3 or Publicis, as the case may be, enters
into an agreement with respect to a competing transaction; or
- (1) Publicis or Bcom3 terminates the Publicis/Bcom3 merger
agreement because the Publicis/Bcom3 merger has not occurred on or
before applicable outside date (see 1.7 above) and (2) on or
before the applicable outside date there has been made a proposal
for a competing transaction with respect to Bcom3 or Publicis, as
the case may be, and within 12 months of the termination of the
Publicis/Bcom3 merger agreement Bcom3 or Publicis, as the case may
be, enters into an agreement with respect to a competing
transaction.
1.9 SHAREHOLDERS AGREEMENTS
In connection with the Publicis/Bcom3 merger, Dentsu will enter into a
shareholders agreement and an alliance agreement with Publicis, and into
a shareholders agreement with Madame Elisabeth Badinter.
1.9.1 SHAREHOLDERS' AGREEMENT BETWEEN PUBLICIS AND DENTSU
o So long as Dentsu owns directly or indirectly not less than 10% of
the outstanding ordinary shares of Publicis, Dentsu will be
represented by two members on the Publicis Supervisory Board . If
the size of the Supervisory Board is increased, the number of
members that Dentsu may appoint will be increased so that Dentsu
will be entitled to appoint a number of members of the Supervisory
Board that is proportionate to its voting power in Publicis.
o Until July 1, 2012, Dentsu will be subject to a "standstill"
limiting its ownership of Publicis shares to the number of shares
that entitles it to 15% of the voting power of Publicis.
o Dentsu will be entitled to buy Publicis ordinary shares on the
open market to the extent it has not been given by Publicis the
opportunity to keep its level of voting power at 15% through the
exercise of preemptive rights.
o Until July 1, 2012, Dentsu will be prohibited from transferring
any ordinary shares of Publicis owned by it. In the case of a
public tender offer on Publicis securities, Publicis will ensure
that the applicable French securities exchange rules (including
the COB's regulations on public tender offers) are complied with,
including in connection with the restrictions on transfers set
forth above. The term of the shareholders' agreement will expire
on July 1,2012, unless it is renewed for an
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additional term of 10 years by agreement of Dentsu and Publicis.
o The shareholders' agreement is governed by French law. The
competent jurisdiction in case of dispute shall be an arbitration
court following the London Court of International Arbitration
rules.
1.9.2 SHAREHOLDERS' AGREEMENT BETWEEN ELISABETH BADINTER AND DENTSU
o Dentsu will vote and cause its representatives on the Publicis
Supervisory Board to vote :
- to elect Ms. Badinter (or any person designated by Ms.
Badinter) chairperson of the Supervisory Board, and to
maintain her or such person in office;
- elect to the Supervisory Board and maintain in office such
persons designated by Ms. Badinter;
- in favor of appointments of or changes in the members of
management (including the directoire) of Publicis proposed
by Ms. Badinter, provided that Ms. Badinter will have
consulted Dentsu on such appointments or changes.
o A special committee of the Supervisory Board will be created
consisting of members appointed by Ms. Badinter and members
appointed by Dentsu, provided that Mrs. Badinter will appoint a
majority of the members of the special committee. The special
committee will examine all strategic decisions and determine the
vote on matters on which Dentsu has agreed to vote as directed by
Mrs. Badinter.
o So long as Dentsu owns not less than 10% of the outstanding
ordinary shares of Publicis, Ms. Badinter and Somarel will vote,
and Ms. Badinter will cause Somarel to vote, the Publicis ordinary
shares they then own to elect and maintain in office two members
of the Supervisory Board chosen from among candidates designated
by Dentsu. If the size of the Supervisory Board is increased, the
number of members that Dentsu may appoint will be increased so
that Dentsu will be entitled to appoint a number of members of the
Supervisory Board that is proportionate to its voting power in
Publicis.
o After due consultation between Dentsu and Mrs. Badinter, Dentsu
will vote its Publicis ordinary shares as directed by Ms. Badinter
on the following matters:
- decisions to amend Publicis's charter to change Publicis's
name or headquarters, the number of members of the
Supervisory Board or the Management Board (directoire ),
the duration of the terms in office of any such members,
and the number of qualifying Publicis ordinary shares
required to be owned by any such member;
- any merger, consolidation or similar business combination
of Publicis with or into any other company as a result of
which the shareholders of Publicis immediately prior to
such business combination will have a majority of the
outstanding votes and common equity interest of the
surviving entity in such business combination, provided
that Dentsu will vote in any event its Publicis ordinary
shares as directed by Ms. Badinter with respect to any
merger of Somarel and/or the management companies holding
certain Somarel shares, with and into Publicis;
- declaration of dividends, so long as Ms. Badinter directs
Dentsu to vote in favor of reasonable dividends that do not
exceed 40% of Publicis's distributable
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profits for the applicable fiscal year;
- capital increases of less than 10% of the share capital or
the voting rights of Publicis where Dentsu is entitled to
subscribe by using preemptive rights, provided that the
capital increases with respect to which Mrs. Badinter may
direct Dentsu will not exceed in the aggregate 10% of the
capital of Publicis as constituted on March 7, 2002; and
- reductions of share capital of Publicis resulting from
cancellation of shares pursuant to Publicis's stock
repurchase program.
o After due consultation between Dentsu and Mrs. Badinter, Dentsu
will vote its Publicis ordinary shares as it will determine on
each of the following:
- decisions to issue securities giving right to more than 10%
of the share capital or of the voting rights of Publicis;
- rights offerings without right to subscribe to, or
participate in, such offering;
- reserved capital increases to identified parties;
- public offers by Publicis of its securities with
suppression of the preferential rights of existing
shareholders to subscribe, unless Dentsu has the right to
participate in such offer in proportion to its ownership of
Publicis;
- decisions to contribute or transfer assets to a third
party, to the extent such decision is put to the
shareholders; and
- decisions to approve any related party transaction
involving Mrs. Badinter or Dentsu or any other affiliate of
Publicis.
o Dentsu will also vote at the Publicis shareholders meeting in
favor of the acceptance of the annual accounts, provided that (1)
the members of the Supervisory Board appointed by Dentsu shall
have been heard by Publicis's audit committee, (2) the statutory
auditors of Publicis (Commissaires aux Comptes) present accounts
certified by them, (3) any objections to such accounts raised by
the members of the Supervisory Board appointed by Dentsu before
the audit committee are considered by such statutory auditors and
answered by them, and (4) such statutory auditors maintain their
certification of such accounts.
o Until July 12, 2012, Dentsu will not pledge or transfer Publicis
ordinary shares owned by Dentsu to any third party, except to
comply with Dentsu's obligations set forth below. In the case of a
public tender offer on Publicis securities, Publicis will ensure
that the applicable French securities exchange rules (including
the COB's regulations on public tend offers) are complied with,
including in connection with the transfer restrictions set forth
above.
o From July 12, 2012, Dentsu may transfer all or any portion of the
Publicis ordinary shares held by it without restriction, except
that Mrs. Badinter will have a right of first refusal if Dentsu
wishes to sell any Publicis ordinary shares after an offer from a
third party, and a right of first offer if Dentsu wishes to sell
in the public market or in an organized selling effort such as to
an underwriter.
o Until July 12, 2012, Dentsu will be prohibited from owning, alone
or in concert, at any time more than a number of Publicis ordinary
shares that entitles it to 15% of the voting power of Publicis.
Dentsu will not be deemed to have violated the foregoing
prohibition if Dentsu inadvertently or unintentionally exceeds the
15% level.
o Dentsu will not enter into any agreement concerning the direction
and management of Publicis with any third party without the
written permission of Ms. Badinter.
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Without Dentsu's written permission, Ms. Badinter will not enter
into any agreement concerning the direction and management of
Publicis with any third party that would result in Dentsu's being
required to join in making a tender offer for Publicis. In case of
a violation by Mrs. Badinter of this provision, Dentsu may
terminate the memorandum of understanding and the shareholders
agreement.
o Mrs. Badinter will use her best efforts to ensure that Dentsu will
be protected against any dilution from a capital increase of
Publicis in cash to which Dentsu is not entitled to subscribe by
using preemptive rights.
o The term of the shareholders agreement will be 12 years, subject
to renewal upon mutual agreement of the parties. The competent
jurisdiction in case of dispute shall be an arbitration court
following the London Court of International Arbitration rules.
1.10 ALLIANCE AGREEMENT BETWEEN PUBLICIS AND DENTSU
o Publicis and Dentsu entered into memorandum of understanding on
March 7, 2002 providing for the terms and conditions of a global
strategic alliance between Publicis and Dentsu for a 20-year term.
o Each party agreed to coordinate the relations of their respective
networks and geographical cooperation of their international
activities.
o Publicis companies will, when requested by Dentsu, represent
Dentsu and its clients, in the Americas, Central, Eastern and
Western Europe and Australia and New Zealand. Dentsu will
consolidate its existing business with the operations of the
Publicis group in Europe and the Americas, on mutually acceptable
terms and conditions.
o Dentsu will agree to consult with Publicis before making any
investments, initiating joint ventures or new ventures in
Australia, Central, Eastern and Western Europe, and the Americas.
o Publicis will not partner with any counterpart in Japan other than
with Dentsu.
o Dentsu and Publicis will agree to the mutual development of a
global media alliance on terms satisfactory to them respectively.
1.11 INDEMNIFICATION
Publicis and Bcom3 have agreed that after the closing of the
Publicis/Bcom3 merger, Publicis and Philadelphia Merger Corp., will
indemnify and hold harmless to the fullest extent of the law:
o each present and former director and officer of Bcom3; and
o each person who served at the request of Bcom3 or any of its
subsidiaries as a director, officer, employee, trustee, partner,
fiduciary or agent etc.;
against all costs and expenses judgements, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation arising out of or
pertaining to any action or omission in their capacities as
12
officers or directors, in each case occurring at or before the closing of
the Publicis/Bcom3.
Publicis also will cause to be maintained Bcom3's existing directors' and
officers' liability insurance policy, or a substitute policy reasonably
satisfactory to the indemnified parties with at least the same coverage
containing terms and conditions that are no less advantageous, which
insures the indemnified parties for any losses arising out of facts or
events that occurred at or prior to the closing of the Publicis/Bcom3
merger for not less than six years after this effective time; provided
that the aggregate annual premium for maintaining this insurance during
the six-year period does not exceed approximately 250% of the current
aggregate annual premium paid by Bcom3 (which is currently approximately
$440,000).
13
2. KEY INFORMATION ON THE MERGER
2.1 RATIONALE OF THE MERGER
The merger between Publicis and Bcom3 will create a new global
communications group:
o Publicis will become the world's 4th largest communications group
with revenues of (euro)4.6bn and more than 38,000 employees;
o Publicis will become the second largest media counsel and buying
group with billings of $36bn or (euro)40bn.
Upon completion of the Publicis/Bcom3 merger, Publicis will be part of
the top tier communications groups.
The alliance agreement that Publicis will enter into with Dentsu, Japan's
leading advertising group, upon completion of the merger, will give
Publicis the capability to bring its clients a comprehensive geographic
coverage.
GEOGRAPHIC COVERAGE
Publicis will be present in 102 countries, 182 cities and 5 continents.
North America will represent 49% of the pro forma combined revenue (vs.
43% before), Europe 37% (vs. 45% before), Asia-Pacific 9% (vs. 7% before)
and the rest of the world 5% (vs. 5% before).
o Publicis's geographic mix will become more balanced and consistent
with worldwide advertising expenditures; and
o Publicis will strengthen its position in North America, the
world's leading market in terms of advertising expenditures, and
will achieve critical mass in emerging markets (Asia-Pacific and
Latin America).
SERVICE OFFERING
The merger will allow Publicis to provide a comprehensive service
offering with 38% of its revenues in specialized agencies and marketing
services, or SAMS, vs. 34% before the merger.
Publicis's objective is to achieve 45% of its revenue in SAMS.
Post-merger, Publicis will have the following leading brands:
o Advertising (Publicis, Saatchi & Saatchi, Leo Burnett, D'Arcy, and
Fallon);
o Media counsel and buying (Zenithmedia, Optimedia International and
Starcom Mediavest Group);
o SAMS (Nelson Communications, Medicus, Publicis Consultants, MS&L,
Pangea, S&S Conill Advertising, Burrell and Publicis-Sanchez &
Levitan).
14
Publicis's brands, through autonomous management and maintenance of
separate identities, will manage their own accounts. This allows the
brands to effectively manage conflicts, and to strategically position
themselves to face the on-going consolidation in the communications
industry.
ADVERTISING
Through its four global networks, Publicis will have an unchallenged
geographic coverage in advertising (n(degree)1 in Europe, n(degree)3 in
the US and leadership in Japan and Asia through the global partnership
agreement with Dentsu).
Post-merger, Publicis will have a strong and complementary advertising
client portfolio notably in the following industries:
o Consumer products;
o Automotive & industry;
o Pharmaceuticals; and
o Financial services.
SPECIALIZED COMMUNICATIONS
The merger will create an enhanced growth platform in specialized
communications:
o The combination of Nelson Communications and Medicus will create a
new leader in healthcare communications with combined revenues of
over (euro)200m;
o The new group will benefit from an extensive geographic network in
corporate communications; and
o Publicis will become a key player in ethnic communications with
Burrell Communications (#3 in the US) and Bromley (#5 in the US).
SYNERGIES
The merger will allow the new group to create synergies through:
o Profitability enhancement of Bcom3;
o Merger of corporate functions: finance, information technology,
human resources, legal, administration and corporate affairs; and
o Possible extension of the "Shared Services Unit Model."
Publicis expects that the merger will allow it to achieve by 2003,
subject to general economic and advertising market conditions, EBITDA and
EBIT margins of approximately 18% and 15%, respectively.
15
STRATEGIC PARTNERSHIP
The global partnership agreement will allow Dentsu and Publicis to
leverage on each other's capabilities:
o Dentsu will offer privileged access for Publicis's clients in
Japan; and
o Publicis will offer privileged access for Dentsu's clients to
Publicis's four networks outside Japan.
Moreover, the global partnership will provide joint development
opportunities in media counsel and buying and in new sectors such as
sports marketing in which Dentsu has a leadership position.
Upon completion of the merger, Dentsu will become a large and stable
shareholder of Publicis in addition to Elisabeth Badinter.
GOVERNANCE
Publicis's Management and Supervisory Boards will be enlarged in order to
admit new members:
o Supervisory Board ("Conseil de Surveillance"): MM. Yutaka Narita
(President of Dentsu) and Fumio Oshima (Senior Managing Director
of Dentsu);
o Management Board ("Directoire"): M. Roger Haupt (CEO of Bcom3).
Roger Haupt will be appointed Chief Operating Officer of Publicis Groupe
S.A. and Chairman of Publicis in the U.S.
Bcom3 has entered into a voting agreement with Madame Elisabeth Badinter
and Societe Anonyme Somarel (each of whom is a holder of Publicis
ordinary shares), under which these Publicis shareholders have agreed to
vote their Publicis ordinary shares in favor of the Publicis / Bcom3
merger.
Publicis and Philadelphia Merger Corp. have entered into voting
agreements with each of Roy J. Bostock, Craig D. Brown, Richard B.
Fizdale and Roger A. Haupt (each of these individuals is currently a
member of Bcom3's board of directors) and Dentsu, under which these Bcom3
stockholders have agreed to vote their Bcom3 common shares in favor of
the Publicis / Bcom3 merger.
16
2.2 INDEPENDENT APPRAISERS' OPINION
The Supervisory Board of Publicis appointed Jean-Charles de Lasteyrie and
Didier Kling as independent appraisers to assess the fairness of the
merger, from a financial point of view, to the shareholders of Publicis.
A translation of the conclusion of their opinion is presented below. The
official text of their opinion is presented in French in the Note
d'Operation.
"In conclusion to our work, we observe that:
o The intrinsic value of BCOM3, determined in accordance with the
three methodologies described above (selected comparable company
analysis, selected comparable transaction analysis and discounted
cash flow analysis), can be compared with the value of the
PUBLICIS securities issued in consideration therefor in the
following manner (in millions euros):
VALUE OF BCOM3:
Comparable public companies 3,400 - 4,000
Selected comparable transactions 4,300 - 5,000
DCF 3,700 - 4,300
VALUE OF CONSIDERATION 3,400 - 4,300
We notice that the value of the merger consideration is consistent with
Bcom3 intrinsic value, leaving aside the selected comparable transaction
analysis, the relevance of which is limited.
o On the basis of the consideration offered to Bcom3 stockholders,
the implied equity contribution to the combined entity is
approximately 55% (PUBLICIS) to 45% (BCOM3).
The relative equity contribution compares to the contribution
analyses based on Publicis's and Bcom3's financial statements as
follows:
- in terms of revenue 2001 : 50% (PUBLICIS) - 50% (BCOM3)
- in terms of EBITA 2001: 55% (PUBLICIS) - 45% (BCOM3)
- in terms of share capital :
- 71% (PUBLICIS) - 29% (BCOM3), before conversion of
the OCEANE, ORA, warrants and stock options
- 58% (PUBLICIS) - 42% (BCOM3), after conversion of
the OCEANE, ORA, warrants and stock options, BCOM3's
stockholders receiving in other respects the
proceeds from the sale of the bonds supporting the
warrants.
17
o The structure of the consideration implying a progressive dilution
spread over 20 years makes the application of the
accretion-dilution analysis method, as usually performed, not
meaningful.
We determined through an overall analysis of the impact of the
financial instruments issued in connection with the merger, that
the merger is not dilutive in terms of net income per share to the
PUBLICIS stockholders.
This analysis relies on a comparison of the sum of the discounted
amounts of Publicis's net income before goodwill amortization,
regardless of synergies, over 20 years, before and after the
merger, and a terminal value after the period of dilution.
The net income numbers have been estimated on the basis of year
2002 forecasts and an identical growth rate of the PUBLICIS and
BCOM3 businesses, taking into account the gradual conversion of
the ORA and the warrants into shares in accordance with their
terms.
o We observe that the merger enables PUBLICIS to get closer to the
size of the three market leaders, whose stock has been traded at a
premium.
o Finally, we observe that the calculations do not reflect the
synergies, which may eventually be created by the Publicis/Bcom3
merger.
In the current market conditions, and based on the analysis set forth
above, our opinion is that the contemplated transaction is fair for the
PUBLICIS shareholders, and we do not have any other observation to
express."
18
3. CONSEQUENCES OF THE MERGER FOR PUBLICIS SHAREHOLDERS
3.1 PRO-FORMA SHAREHOLDING
56,250,000 new ordinary shares will be issued on the effective date of the
Publicis/Bcom3 merger. Notwithstanding any adjustment of their conversion ratio
in the case of transactions affecting Publicis's share capital, 56,250,000
additional ordinary shares will be issued upon redemption or exercise of all
securities to be issued in the Publicis/Bcom3 merger.
-------------------------------------------------------------------------------------------------------------------------------
CAPITAL AND VOTING RIGHTS BEFORE DILUTION(1)
-------------------------------------------------------------------------------------------------------------------------------
BEFORE MERGER AFTER MERGER
-------------------------------------------------------------------------------------------------------------------------------
VOTING VOTING
SHARES % RIGHTS % SHARES % RIGHTS %
------ ------ --------- ------- -------------------------------------------------
Elisabeth Badinter 7,766,800 5.6% 15,533,600 8.9% 7,766,800 4.0% 15,533,600 6.7%
Somarel 30,960,000 22.1% 61,916,400 35.6% 30,960,000 15.8% 61,916,400 26.9%
Dentsu(2) 28,691,074 14.6% 34,530,064 15.0%
Treasury stocks 4,758,024 3.4% 4,758,024 2.4%
Bcom3 former class A
shareholders(2) 27,558,926 14.1% 20,730,941 9.0%
Float 96,297,025 68.9% 96,500,426 55.5% 96,297,025 49.1% 97,489,421 42.3%
TOTAL 139,781,849 100.0% 173,950,426 100.0% 196,031,849 100.0% 230,200,426 100.0%
-------------------------------------------------------------------------------------------------------------------------------
(1) Before the conversion / exercise of all Publicis dilutive securities
(OCEANE, stock-options, warrants and ORANE)
(2) Approximately 6,827,985 ordinary shares to be issued at the closing of
the Publicis/Bcom3 merger will be subject to a special arrangement
providing for the separation of the bare legal title and usufruct
interest. For a period of two years following the closing date of the
Publicis/Bcom3 merger, Class A stockholders will obtain the right to
receive the usufruct interest (i.e. the economic interest) in such
shares, while Dentsu will obtain the right to receive the bare legal
title in these shares, including the voting rights associated with them.
-------------------------------------------------------------------------------------------------------------------------------
CAPITAL AND VOTING RIGHTS AFTER DILUTION(1)
-------------------------------------------------------------------------------------------------------------------------------
BEFORE MERGER AFTER MERGER
-------------------------------------------------------------------------------------------------------------------------------
VOTING VOTING
SHARES % RIGHTS % SHARES % RIGHTS %
------ ------ --------- ------- -------------------------------------------------
Elisabeth Badinter 7,766,800 5.6% 15.533.600 8.9% 7,766,800 2.9% 15,533,600 5.1%
Somarel 30,960,000 22.1% 61.916.400 35.6% 30,960,000 11.4% 61,916,400 20.3%
Dentsu(2) 41,004,130 15.1% 45,757,182 15.0%
Treasury stocks 4,758,024 3.4% 4,758,024 1.8%
Bcom3 former class A
shareholders(2) 71,495,870 26.4% 64,667,884 21.2%
Float 96,297,025 68.9% 96.500.426 55.5% 114,894,482 42.4% 117,172,817 38.4%
TOTAL 139,781,849 100.0% 173.950.426 100.0% 270,879,306 100.0% 305,047,883 100.0%
------------------------------------------------------------------------------------------------------------------------------
(1) Following the conversion / exercise of all Publicis dilutive securities
(OCEANE, stock-options, warrants and ORANE)
(2) Approximately 6,827,985 ordinary shares to be issued at the closing of
the Publicis/Bcom3 merger will be subject to a special arrangement
providing for the separation of the bare legal title and usufruct
interest. For a period of two years following the closing date of the
Publicis/Bcom3 merger, Class A stockholders will obtain the right to
receive the usufruct interest (i.e. the economic interest) in such
shares, while Dentsu will obtain the right to receive the bare legal
title in these shares, including the voting rights associated with them.
19
In April 9, 1998, Societe Anonyme Somarel shareholders - i.e. members of
Madame Badinter's family and financial investors (BNP-Paribas, Pechel
Industries, Compagnie Financiere Saint-Honore, Francarep and SRRE) - and
Sarl MLMS and certain employees and executives of Publicis represented by
Monsieur Maurice Levy entered into an agreement.
Among others things, the agreement provides that Somarel and Publicis
shall merge before June 30, 2003 in order to allow a higher level of
liquidity for financial investors, employees and executives shareholders.
20
3.2 PUBLICIS PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3.2.1 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF
DECEMBER 31, 2001
---------------------------------------------------------------------------------------------------------------------
(FRENCH GAAP) PUBLICIS BCOM3 HISTORICAL PRO FORMA PRO
HISTORICAL HISTORICAL COMBINED ADJUSTMENTS FORMA
---------------------------------------------------------------------------------------------------------------------
(AMOUNTS IN MILLIONS)
Goodwill, net................................... (euro)993 (euro)1,510 (euro)2,503 (euro)832 (A) (euro)3,335
Intangible assets, net.......................... 199 41 240 1,957 (A) 2,197
Property and equipment, net..................... 351 427 778 -- 778
Investments and other financial assets, net..... 67 21 88 -- 88
Investments accounted for by the equity method.. 8 60 68 -- 68
Total non current assets, net................... 1,618 2,059 3,677 2,789 6,466
Inventory and costs billable to clients......... 195 242 437 -- 437
Accounts receivable............................. 1,845 1,872 3,717 -- 3,717
Other receivables and other assets.............. 439 257 696 -- 696
Marketable securities and cash and cash
equivalents.................................. 799 259 1,058 -- 1,058
Current assets.................................. 3,278 2,630 5,908 -- 5,908
Total assets.................................... 4,896 4,689 9,585 2,789 12,374
Capital stock................................... 56 -- 56 23 (C) 79
Additional paid-in capital and retained earnings 227 1,478 1,705 215 (C) 1,920
Other equity.................................... -- -- -- 858 (B) 858
Shareholders' equity............................ 283 1,478 1,761 1,096 2,857
Minority interests.............................. 89 21 110 -- 110
Provisions for contingencies and charges........ 266 313 579 775 (E) 1,354
Bank borrowings and overdrafts.................. 1,069 276 1,345 858 (D) 2,203
Accounts payable................................ 1,875 1,997 3,872 -- 3,872
Accrued expenses and other liabilities.......... 1,314 604 1,918 60 (F) 1,978
Bank borrowings and liabilities................. 4,258 2,877 7,135 918 8,053
Total liabilities and shareholders' equity...... 4,896 4,689 9,585 2,789 12,374
21
3.2.2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE
YEAR ENDED DECEMBER 31, 2001
---------------------------------------------------------------------------------------------------------------------
(FRENCH GAAP) PUBLICIS BCOM3 HISTORICAL PRO FORMA PRO
HISTORICAL HISTORICAL COMBINED ADJUSTMENTS FORMA
---------------------------------------------------------------------------------------------------------------------
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
Revenues........................................(euro)2,434 (euro)2,158 (euro) 4,592 (euro) -- (euro)4,592
Salaries and related expenses................... (1,363) (1,280) (2,643) -- (2,643)
Other operating expenses........................ (661) (549) (1,210) -- (1,210)
Total expenses.................................. (2,024) (1,829) (3,853) -- (3,853)
Other operating income.......................... 16 -- 16 -- 16
Operating income before depreciation and
amortization................................. 426 329 755 -- 755
Depreciation and amortization expense........... (84) (79) (163) -- (163)
Operating income................................ 342 250 592 -- 592
Financial expense, net.......................... (30) (26) (56) (24) (H) (80)
Income of consolidated companies before taxes,
exceptional items and goodwill amortization.. 312 224 536 (24) 512
Income taxes.................................... (99) (89) (188) 40 (I) (148)
Net income of consolidated companies before
exceptional items and goodwill amortization.. 213 135 348 16 364
Equity in net income of non-consolidated
companies.................................... 9 2 11 -- 11
Net income of consolidated companies before
exceptional items............................ 222 137 359 16 375
Exceptional expense, net of taxes............... (3) (13) (16) -- (16)
Goodwill amortization and depreciation of
allocated intangibles........................ (49) (96) (145) (41) (G) (186)
Net income before minority interests............ 170 28 198 (25) 173
Minority interests.............................. (19) (3) (22) -- (22)
Group net income................................ 151 25 176 (25) 151
Earnings per share before exceptional items,
goodwill amortization and depreciation of
allocated intangibles, net of taxes
Basic........................................... 1.44 1.62
Diluted(a)...................................... 1.43 1.44
Earnings per share:
Basic........................................... 1.09 0.75
Diluted......................................... 1.08 0.67
Weighted average shares outstanding:
Basic........................................... 139 196
Diluted......................................... 140 224
(a) Assuming the ORANE are redeemed in new shares. If the ORANE were redeemed
in existing shares, diluted EPS would be (euro)1.51 assuming an
incremental after tax interest charge of (euro)26 million.
22
3.2.3 NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
AS OF DECEMBER 31, 2001 (IN MILLIONS EXCEPT PER SHARE DATA,)
3.2.3.1. Basis of Presentation
The acquisition of Bcom3 is subject to shareholder approval of both
Publicis and Bcom3. The pro forma financials assume that the Publicis and
Bcom3 stockholders will approve the transaction and that the other
conditions to the closing of the mergers will be met or waived. The
consideration for this acquisition will be paid as follows:
o a capital increase of Publicis reserved for Bcom3 with issuance of
new shares (56.25 million);
o the issuance of 1,562,500 bonds redeemable for new or existing
shares (ORAs) with a maturity period of 20 years; and
o the issuance of 2,812,500 bonds with warrants (OBSAs) for
(euro)858 million with a maturity of 20 years and an exercise
price of (euro)30.50.
The pro forma consolidated accounts were prepared using:
o the audited consolidated financial statements of Publicis under
French GAAP as of and for the fiscal year ended December 31, 2001;
and
o the consolidated financial statements of Bcom3 under U.S. GAAP as
of and for the fiscal year ended December 31, 2001, converted into
euros using the December 31, 2001 exchange rate for the balance
sheet ((euro)1 = $0.8813) and the 2001 average exchange rate for
the statement of income ((euro)1= $0.8956).
The pro forma information does not reflect the impact of the issuance by
Publicis of OCEANE (bonds that may be converted into or exchanged for new
or existing shares) in January 2002, as part of the debt restructuring
program, which amounts to (euro)690 million with a maturity period of 16
years.
23
3.2.3.2. Pro forma adjustments have been made to these unaudited consolidated
pro forma financial statements to reflect the following:
(A) In accordance with the article 210 of 99-02 of the CRC (Comite de
Reglementation Comptable), the purchase price of the Bcom3 shares equals
the fair value of the securities issued in the exchange as of the date of
Publicis obtaining effective control of Bcom3, taking into account the
impact of the specific contract clauses relating to the lockup of the
securities. For the purpose of the pro forma financial information, it is
estimated that the specific contract clauses relating to the transfer
restrictions on the securities to be received by the Bcom3 stockholders
in accordance with the terms of the Publicis/Bcom3 merger agreement will
result in a(euro)30.50 value per Publicis ordinary share. On this basis,
the purchase price is estimated to be(euro)3,432 million (consisting of
the issuance of 56,250,000 new Publicis ordinary shares at a share price
of(euro)30.50; issuance of 1,562,500 ORAs redeemable for 28,125,000
Publicis shares at a share price of(euro)30.50; and the issuance of
2,812,500 OBSAs). This amount will be adjusted on the basis of the fair
value of the securities issued in the exchange.
Publicis made a preliminary evaluation of the identifiable assets and
liabilities of the Bcom3 group in accordance with the requirements of
Article 211 of rule 99-02 of the CRC. Based on information available to
date, restructuring costs could not be estimated. The purchase price and
preliminary goodwill allocation in accordance with French GAAP have been
determined as follows (in million euros):
Publicis ordinary shares exchanged for Bcom3 1,716
ORAs issued 858
OBSAs issued 858
Total consideration 3,432
Add: net book value of net liabilities acquired 73
Goodwill before allocation 3,505
Preliminary allocation to assets and liabilities
Intangible assets 1,998
Accrued liabilities (60)
Deferred taxes (775)
Residual goodwill 2,342
Less: Bcom3 Group, Inc. goodwill acquired (1,510)
Total adjustment to goodwill 832
Total adjustment to intangible assets (net of Bcom3
intangibles) 1,957
A more precise allocation will be prepared within the year that follows
the completion of the Bcom3 acquisition.
(B) In accordance with Avis n(degree) 28 of OEC and following the detailed
analysis of the characteristics of the ORAs issued, these instruments
have been accounted for as equity instruments and presented separately in
the shareholders' equity at their estimated fair value. The remuneration
given to the holders of these redeemable bonds is classified accordingly.
(C) Impact of the Bcom3 shares exchanged for 56,250,000 Publicis ordinary
shares and additional paid-in capital (approximately (euro)23 million of
common stock and (euro)1,693 million additional paid-in capital) and the
elimination of Bcom3's shareholders' equity.
24
(D) Issuance of the bonds with warrants (OBSA) for (euro)858 million, without
separate evaluation of the warrants on the balance sheet in accordance
with French GAAP.
(E) Deferred tax liabilities on acquired net assets.
(F) Estimated acquisition costs.
(G) Amortization expense for 2001 of the identified intangible assets and
goodwill following the preliminary allocation of the purchase price of
Bcom3 (refer to (A)). These assets are amortized using the straight line
method over their estimated useful life: goodwill and client
relationships maintained for more than 20 years are amortized over 40
years, client relationships maintained for less than 20 years - amortized
over 12 years, trade name - amortized over 20 years, for a net variation
of the depreciation expense on intangible assets and of goodwill
amortization of (euro)41 million. The amortization expense of allocated
intangibles has been included in a separate line item with the
amortization of goodwill.
(H) Interest expense for 2001 on the OBSA bearing interest at the rate of
2.75% per annum.
(I) Income taxes on the above adjustments.
3.2.3.3. Summary of adjustments and reclassifications applied to Bcom3's
financial statements to account for differences between generally
accepted accounting principles in France and the United States
Publicis's consolidated financial statements are prepared in accordance
with French GAAP, which differs materially from U.S. GAAP. The unaudited
adjustments and reclassifications applied to Bcom3's historical audited
financial statements to conform to Publicis's disclosed accounting
policies under French GAAP are summarized below:
CONTINGENT CONSIDERATION
Under U.S. GAAP, contingent consideration is not recorded as purchase
price until the contingency has been resolved, whereas, under French
GAAP, contingent consideration is deemed to be part of the purchase
price. Consequently, (euro)30 million of net goodwill was recorded and
the amortization expense was increased by (euro)1.7 million.
PENSION PLAN
In accordance with U.S. GAAP, Bcom3 recorded in 2001 an additional
minimum liability of (euro)4.8 million to accrue for accumulated benefit
obligations in excess of the fair value of plan assets. The recognition
of this additional pension liability was reported as a reduction of
equity through comprehensive income, net of tax (euro)3.3 million. Under
French GAAP, additional minimum liability is recognized as an expense.
ACCOUNTING FOR THE BUSINESS COMBINATION WITH NOVO MEDIA GROUP
In December 1999, The MacManus Group purchased a 57% interest in the Novo
Media Group. In January 2000, 15% of the interest was sold, but in 2001,
repurchased. Due to
25
differences in consolidation methodologies between French GAAP and U.S.
GAAP, under French GAAP, the interest is consolidated in 2000, whereas
under U.S. GAAP, it is not. There is no impact on the consolidated net
income due to the differences.
MANDATORILY REDEEMABLE STOCK
The mandatorily redeemable stock reflected on Bcom3's financial
statements as a specific line item under U.S. GAAP was reclassified as
shareholders' equity.
3.2.3.4. Comparative Condensed Financial Information in U.S. GAAP and French
GAAP
The historical consolidated balance sheet and income statement of Bcom3
have been adjusted to reflect the above differences from U.S. GAAP to
French GAAP as follows:
--------------------------------------------------------------------------------
Bcom3 Bcom3 Bcom3
historical historical historical
U.S. GAAP U.S. GAAP French GAAP
--------------------------------------------------------------------------------
(amounts in millions)
Total non current assets, net............... $1,789 (euro)2,030 (euro)2,059
Current assets.............................. 2,317 2,630 2,630
Total assets................................ 4,106 4,660 4,689
Shareholders' equity........................ 1,005 1,141 1,478
Mandatorily redeemable stock................ 302 342 -
Minority interests.......................... 18 20 21
Total long-term and short-term liabilities.. 2,781 3,157 3,190
Total liabilities and shareholders' equity.. 4,106 4,660 4,689
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Bcom3 Bcom3 Bcom3
historical historical historical
U.S. GAAP U.S. GAAP French GAAP
--------------------------------------------------------------------------------
(amounts in millions)
Revenues.................................... $1,917 (euro)2,141 (euro)2,158
Total expenses.............................. (1,635) (1,826) (1,829)
Operating income before depreciation,
interest and taxes....................... 282 315 329
Depreciation and amortization............... (149) (166) (79)
Operating income............................ 133 149 250
Net income.................................. 26 30 25
--------------------------------------------------------------------------------
26
4. DESCRIPTION OF PUBLICIS EQUITY ISSUE
The Extraordinary Shareholders' Meeting of Publicis will be held on June
18, 2002. At the meeting it is proposed to delegate full powers to the
Management Board, with the power of substitution under the conditions
laid down by law, to increase Publicis's capital by issue, at a premium
of 30.10 euros per share, of 56,250,000 new Publicis ordinary shares with
a par value of 0.40 euro each. This authorization will be granted for a
period of six months starting on the date of the meeting.
Such issue of new Publicis ordinary shares will be reserved for
Philadelphia Merger LLC. Therefore, the preferential subscription right
of the Publicis shareholders will be suppressed for the benefit of
Philadelphia Merger LLC.
The shares must be paid up in cash at the time of the subscription.
GROSS VALUE OF THE ISSUE
The total gross value from the issue of new shares will amount to
1,715,600,000 euros. The total expenses incurred in connection with the
transaction are estimated at approximately 60 million euros.
DIVIDENDS
Publicis ordinary shares issued in connection with the Publicis/Bcom3
merger will not be eligible to receive the cash dividend declared in 2002
related to Publicis's 2001 fiscal year.
RIGHTS ATTACHED TO THE NEW SHARES
Subject to the above paragraph on the 2001 dividends, at the effective
time, the new ordinary shares shall be treated pari passu with the
existing ordinary shares, which are currently traded on Euronext Paris
S.A.'s Premier Marche. The shares will have the same rights and will be
subject to all of the provisions of Publicis's statuts and to the
resolutions adopted at Publicis shareholders' meetings.
LISTING OF THE NEW SHARES AT EURONEXT PARIS
Publicis will use its reasonable best efforts to have the newly issued
shares listed on the Premier Marche of Euronext Paris within 5 business
days of the closing date of the mergers.
TRANSFER RESTRICTIONS
The transfer restrictions described under section 1.4 and 1.9 above will
apply to the new Publicis ordinary shares.
In addition to applicable French laws and regulations on securities
transfers, Publicis's statuts (article 7) will apply to the new shares.
It requires that any individual or entity, acting alone or as member of a
group of shareholders, who holds or becomes the holder of, directly or
indirectly, more than 1% of its share capital or voting rights must
notify Publicis within 15 days by registered mail, return receipt
requested, of the number of shares it holds. The same notification
requirement applies to each subsequent increase or decrease in ownership
of 1% or whole multiples of 1%. If a person does not comply with this
notification requirement, one or more shareholders holding together 1% or
more of its share capital may call a shareholders' meeting to deprive the
shares in excess of the relevant threshold of voting rights for all
shareholders' meetings for two years following
27
the date on which the owner complies with the notification requirements.
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5. DESCRIPTION OF ORAS
NOTIONAL AMOUNT
Each ORA issued in the Publicis/Bcom3 merger will have an initial
notional amount of euros 549. The notional amount of the ORA is never
paid in cash but rather in a pre-agreed number of Publicis ordinary
shares. Each ORA represents the right to receive 18 newly issued ordinary
shares or ordinary shares held in treasury over the term of the ORA. On
September 1, 2005, and on each September 1 thereafter through and
including September 1, 2021, each holder of an ORA will receive one
Publicis ordinary share and the notional amount of the ORA will be
reduced by euros 30.50. The final redemption of the remaining notional
amount in Publicis ordinary shares will occur on the final maturity date
which is the 20th anniversary of the issuance of the ORAs.
The number of Publicis ordinary shares to be so received is subject to
customary anti-dilution adjustments to reflect events affecting the
Publicis ordinary shares.
ANNUAL CASH AMOUNT
An annual cash amount accrues each year on the outstanding ORAs as
described below, but accrued amounts are only paid in a given year if the
general meeting of Publicis shareholders, in its discretion, declares a
dividend on the Publicis ordinary shares between September 1 of the
preceding year and August 31 of that year. The annual amount accruing on
each ORA is a minimum of 0.82% of its outstanding notional amount per
annum and is payable annually on September 1 (or the following business
day if such day is not a business day).
For the period from the date of issuance up to and including August 31,
2004, the annual amount will be only the minimum of 0.82% per annum of
the outstanding notional amount (euros 4.50 per ORA). The first annual
amount payable on September 1,2002 will be calculated on a pro rata basis
for the period from the date of issuance through August 31,2002. For the
period starting September 1, 2004, the annual amount accruing each year
with respect to each euros 30.50 of notional amount of the ORA will be
equal to 110% of the historical average of the annual dividend declared
on each Publicis ordinary share (excluding the related tax credit (avoir
fiscal), but in each year will be at least the minimum rate. The
historical average will be recalculated every three years and will be
based on the actual dividends (excluding the related tax credit (avoir
fiscal)) declared on each Publicis ordinary share during a three-year
period which consists of the year of the annual amount determination and
the preceding two years, but in each year will be at least the minimum
rate.
As an example, the annual amount payable on September 1, 2005, 2006 and
2007 will be calculated on the basis of the average of the actual
dividends declared on a Publicis ordinary share in the three twelve-month
periods preceding September 1 of the years 2003, 2004 and 2005 and the
annual amount payable on September 1, 2008, 2009 and 2010 will be
calculated on the basis of the average of the actual dividends declared
on a Publicis ordinary share in the three twelve-month periods preceding
September 1 of the years 2006, 2007 and 2008. The annual amount is
payable with respect to the notional amount then outstanding, determined
by multiplying the remaining balance of Publicis ordinary shares for
which the ORAs could then be redeemed by euros 30.50. The annual amount
due in 2022 will be paid on the 20th anniversary of the issuance of the
ORAs and it will be calculated on a pro rata basis for the period from
September 1, 2021 through the 20th anniversary of the ORA issuance.
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As mentioned above, the annual amount due for a given year will only be
paid if the general meeting of Publicis's shareholders has declared a
dividend between September 1 of the previous year and August 31 of the
year in question. Should no dividend be declared by the general meeting
of Publicis's shareholders between September 1 of the previous year and
August 31 of the year in question, the annual amount will be payable in
full (without bearing interest), with all arrearages in the first year in
which a dividend is declared by the Publicis general shareholders meeting
regardless as to what amount that dividend is.
In the event that no dividend is declared on the Publicis ordinary shares
for five consecutive years, each holder will be entitled to accelerate
the redemption of the ORAs in full, but only for Publicis ordinary
shares, and will not receive any payment in respect of accumulated and
unpaid annual amounts. If redemption of the ORAs is accelerated for any
other reason, or if there are accrued and unpaid annual amounts in
respect of any of the five years prior to final maturity, Publicis will
pay accrued and unpaid annual amounts at its option in either cash or
Publicis ordinary shares.
If the annual amount is paid in shares of Publicis, the value of the
shares shall be equal to the average of the 10 opening trading prices of
Publicis ordinary shares on the Premier Marche of Euronext Paris
immediately prior to the accelerated redemption date or the final
redemption date, as applicable (but excluding that date).
RANK; NEGATIVE PLEDGE
The ORAs and the right to the annual cash amount (if any) will constitute
unsecured, direct, unconditional, unsubordinated obligations of Publicis
and will rank equal with all other unsecured debt and guarantees of
Publicis.
As long as any ORAs remain outstanding, Publicis may not grant any
mortgage on its real property, or a pledge of all or part of its business
or assets or trade receivables (except for securitization transactions of
trade receivables or other transactions involving the issuance of
securities which represent trade receivables of Publicis) for the benefit
of other bonds without granting the same security interests and the same
rank to the holders of the ORAs. This restrictive covenant applies only
to issues of other bonds (obligations) and does not affect Publicis's
ability to make guarantees or grant security interests to creditors other
than holders of bonds, or to otherwise transfer title to its assets.
SUSPENSION OF REDEMPTION
Publicis is entitled to suspend, upon proper notice, an annual redemption
of the ORAs, for a maximum period of three months, in the event of an
increase in Publicis's registered capital, merger, spin-off or other
financial transactions which confer on shareholders a preferential
subscription right or reserve the shareholders' priority subscription
period. Publicis's decision to suspend the exercise of the redemption
must be announced in the Bulletin des Announces Legales Obligatoires
(BALO). The notice must be published at least 15 days before the date on
which the suspension takes effect and must state the effective date of
the suspension and the end of the suspension period. This information
will also be included in a notice in a nationally distributed financial
newspaper in France and to Euronext Paris.
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MODIFICATION OF TERMS AND WAIVERS
Pursuant to applicable French law, any modification of the terms of the
ORAs (including the annual payment or the redemption provisions) requires
approval by a meeting of holders. The consent of individual holders is
not required.
ACCELERATED AND AUTOMATIC REDEMPTION
As long as there are any ORAs outstanding, Publicis may not accelerate
the redemption of the ORAs. However, Publicis may, at any time and with
no limitation as to the price or quantity, purchase the ORAs privately,
on the public markets, or through a public tender or exchange offer.
These transactions will not affect the amortization schedule for the ORAs
still outstanding. Any ORAs purchased in this manner will be cancelled.
The redemption of the ORAs may be accelerated at the option of each
holder of an ORA upon the occurrence of each of the following events.
These "accelerated redemption events" include:
o the general shareholders' meeting of Publicis has not declared a
dividend on the Publicis ordinary shares for five consecutive
fiscal years preceding the notice of accelerated redemption;
o a public tender offer for 100% of the equity securities of
Publicis is commenced after such public tender offer has been
cleared by the relevant stock market authorities and a notice
signifying the opening of the offer has been published by these
authorities;
o Publicis transfers, or proposes to transfer, whether by means of a
sale, spin-off, merger, transfer of assets or other means, a
substantial part of Publicis's assets or business to a third
party, with a "substantial part" meaning any assets or business
representing one-third or more of the consolidated revenues of
Publicis based on Publicis's most recent financial statements;
o any person, directly or indirectly, alone or as part of a group of
shareholders, other than the group that consists of Elisabeth
Badinter (directly or indirectly through Somarel) and Dentsu,
obtains or is presumed to have acquired control of Publicis under
applicable French law. A change of control is also deemed to have
occurred if a third party acts in concert with the group
consisting of Mrs. Badinter and Dentsu and (1) Mrs. Elisabeth
Badinter no longer dominates such group, or (2) the third party is
a competitor of Publicis. "Control" has the meaning set forth in
article L.233-3 of the French Commercial Code;
o Publicis fails to pay an annual cash amount when due (subject to
the sixth paragraph under "Annual Cash Amount") or to redeem the
ORAs when required, and such failure continues for a period of 30
business days after Publicis has received notice of such failure
from the representatives of the holders, provided that no meeting
of holders needs to be held for this purpose;
o Publicis breaches any of its other obligations with respect to the
ORAs, and such breach continues for a period of 30 business days
after Publicis has received notice of such breach from the
representatives of the holders, provided that no meeting of
holders needs to be held for this purpose;
o one of the following events occurs and continues for a period of
30 business days after Publicis has received notice of such event
from the representatives of the holders, provided that no meeting
of holders needs to be held for this purpose) : (i) Publicis or
one of its material subsidiaries (as defined below) fails in the
due
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repayment upon maturity of any indebtedness (as defined below), or
(ii) any indebtedness of Publicis or one of its material
subsidiaries is accelerated due to a default by Publicis or the
relevant material subsidiary, or (iii) Publicis or one of its
material subsidiaries fails to honor a guarantee or indemnity in
respect of any indebtedness.
For purposes of determining an accelerated redemption event:
"indebtedness" means any debt (including in connection with leasing
transactions)resulting from any obligation to repay borrowed money with a
term of at least one year and a principal amount of at least euros 25
million and which is evidenced by contract or other written instrument,
but does not include trade debt and inter-company loans; and "material
subsidiary" means any subsidiary of Publicis that accounts for at least
5% of the consolidated net income (on a pre-tax basis and excluding
extraordinary income) of Publicis or which accounts for at least 5% of
the consolidated gross assets of Publicis and its subsidiaries
(disregarding minority interests), calculated on the basis of the most
recent audited consolidated financial statements of Publicis and the
respective subsidiary.
Upon accelerated redemption, each ORA will be fully redeemed for all
Publicis ordinary shares for which the ORA is then redeemable.
A holder desiring to redeem ORAs upon an accelerated redemption event has
to submit a written request to the intermediary holding the ORAs, which
intermediary shall transmit the request to the paying agent. Such a
request is irrevocable.
In the event of Publicis's insolvency, court-ordered or voluntary
liquidation, settlement with creditors or bankruptcy filing, the ORAs are
automatically redeemed for all Publicis ordinary shares for which the
ORAs are then redeemable.
Any accelerated redemption, whether upon request or automatic, will only
be made in Publicis shares.
ANTI-DILUTION RIGHTS AND OTHER ADJUSTMENTS
For as long as there are any ORAs outstanding, Publicis may not amortize
the corporate capital or modify the distribution of profits. Publicis
may, however, create priority dividend shares without voting rights,
provided that the rights of the ORA holders are preserved pursuant to the
terms of the issuance contract.
Upon the occurrence of certain dilutive events described in more detail
below, the number of ordinary shares into which an ORA can be redeemed
will be adjusted to maintain the rights of the ORA holders. Adjustment
will be made in accordance with French law and the terms of the issuance
contract so that the aggregate value of the number of shares into which
an ORA is redeemable immediately following such event is equal to the
aggregate value of the number of shares into which it was redeemable
immediately prior to such event. These events are:
o an issue of Publicis shares with a listed preferential
subscription right;
o a grant to Publicis shareholders of any financial instrument other
than shares of Publicis;
o a capital increase through capitalization of reserves, profits, or
issue premiums, and the grant of shares for no consideration,
stock splits or reverse stock splits;
o an increase in the nominal value of the shares as a result of
capitalization of reserves, profits or issue premiums;
32
o a distribution of reserves or premiums in cash or securities;
o a merger or spin-off;
o a repurchase by Publicis of its own shares at a price higher than
the market price; and
o a payment by Publicis of an extraordinary dividend.
In the event the registered share capital of Publicis is reduced due to
losses, whether by reducing the nominal value or the number of shares,
the nominal value or the number of Publicis ordinary shares into which
the ORA can be redeemed will be reduced proportionally, as if the ORA
holders had been shareholders as of the issue date of the ORAs.
WITHHOLDING TAX
The government of any jurisdiction in which Publicis is incorporated may
require Publicis to withhold amounts from payments on the ORAs for taxes
or other governmental charges. If such a withholding should be required,
Publicis will pay to each ORA holder an additional amount so that the net
amount received by the holder will be equal to the amount the holder
would have received if no withholding had been required.
LISTING
Publicis will apply to have the ORAs listed on Euronext Paris and will
use its reasonable best efforts to obtain admission to trading for the
ORAs within five business days after the closing date of the mergers.
Publicis will pay all fees and charges related to the listing on Euronext
Paris and the costs involved in maintaining the listing.
GOVERNING LAW AND FORUM
The ORAs are governed by French law. Any actions against Publicis under
the ORAs will have to be brought in the competent French court located at
Publicis's registered office, which is in Paris.
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6. DESCRIPTION OF OBSAS
The OBSA is a security which consists of a conventional debt security
(which is also considered to be a note (obligation) for purposes of
French corporate law) and detachable warrants to subscribe for Publicis
ordinary shares.
NOTIONAL AMOUNT ISSUED
Each OBSA issued in the Publicis/Bcom3 merger will have a notional amount
of euros 305. Each OBSA will carry 10 detachable warrants with the terms
described under the caption "Terms of Warrants."
TERMS OF NOTES
FINAL MATURITY
The notes will mature 20 years from the OBSA issuance.
INTEREST
The notes bear interest at a fixed rate of 2.75% per annum, payable
semi-annually on each June 30 and December 31 (or the following business
day if such day is not a business day).
RANK; NEGATIVE PLEDGE
The notes and the interest payable thereon will constitute general
unsecured, direct, unconditional, unsubordinated obligations of Publicis
and will rank equal with all other unsecured debts and guarantees of
Publicis.
As long as any of the notes are outstanding, Publicis may not grant any
mortgage on its real property nor a pledge on all or part of its business
or assets or trade receivables (except for any securitization transaction
of the trade receivables or other transactions involving the issuance of
securities which represent trade receivables of Publicis)for the benefit
of other bonds without granting the same security interests and same rank
to the holders of the notes. This restrictive covenant applies only to
issues of other bonds (obligations) and does not affect the ability of
Publicis to make guarantees or grant security interests to creditors
other than holders of bonds, or to otherwise transfer title to its
assets.
REDEMPTION
On June 30, 2013, on each June 30 thereafter through and including June
30, 2021, and on the 20th anniversary of the issuance, each holder of a
note will receive an amount in cash equal to 10% of the initial notional
amount of such note and the notional amount of the note will be reduced
accordingly.
Publicis reserves the right, at any time and with no limitation as to
price or quantity, to purchase all or part of the notes, privately, on
the public markets, or by public tender or exchange offers. These
transactions will not affect the redemption schedule for the notes still
outstanding.
MODIFICATION OF TERMS AND WAIVERS
Pursuant to applicable French law, any modification to the terms of the
notes (including the annual payment and redemption provisions)requires
approval by a meeting of holders. See "Meeting of Holders and
Representatives of Holders" below. The consent of individual holders is
not required. However, any modification that increases the obligations of
the holders is not permitted, except with the consent of all holders.
34
Similarly, a waiver of a default or other breach would require approval
by a meeting of holders, but not the consent of individual holders. Like
an amendment, a waiver could be approved by a majority vote without your
consent.
EVENT OF DEFAULT
Upon an event of default, the representatives of the holders may by
written notice to Publicis, pursuant to a decision of a majority of the
holders, demand the payment of all the notes in each of the following
cases:
o Publicis fails to pay interest or principal on the notes when due,
and such failure continues for 30 business days;
o Publicis breaches any of its other obligations with respect to the
notes, and such breach continues for a period of 30 business days
after Publicis has received notice of such breach from the
representatives of the holders, provided that no meeting of
holders needs to be held for this purpose.
o one of the following events occurs and continues for a period of
30 business days after Publicis receives a notice of such event
from the representatives of the holders, provided that no meeting
of holders needs to be held for this purpose:
o Publicis or one of its material subsidiaries fails in the
due repayment of any indebtedness.
o any indebtedness of Publicis or one of its material
subsidiaries is accelerated due to a default by Publicis or
the relevant material subsidiary.
o Publicis or one of its material subsidiaries fails to honor
a guarantee or indemnity in respect of any indebtedness.
o Publicis or any of its material subsidiaries requests the
appointment of a conciliator, enters into an agreement with
its principal creditors, enters into voluntary or
involuntary liquidation, bankruptcy proceeding, total sale
or any equivalent step or proceeding.
o any event occurs that has effect analogous or equivalent to
any of the foregoing.
For purposes of determining an event of default:
"indebtedness' 'means any debt (including in connection with leasing
transactions)resulting from any obligation to repay borrowed money with a
term of at least one year and a principal amount of at least euros 25
million and which is evidenced by a contract or other written instrument,
but does not include trade debt and inter-company loans; and "material
subsidiary" means any subsidiary of Publicis which accounts for at least
5% of the consolidated net income (on a pre-tax basis and excluding
extraordinary income)of Publicis or which accounts for at least 5% of the
consolidated gross assets of Publicis and its subsidiaries (disregarding
minority interests) calculated on the basis of the most recent audited
financial statements of Publicis and the respective subsidiary.
Each noteholder who wishes to obtain early redemption of the notes upon
an event of default shall make a written request to the intermediary
holding his or her notes, who must submit the request to the institution
responsible for servicing the notes. Such a request is irrevocable.
WITHHOLDING TAX
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The government of any jurisdiction in which Publicis is incorporated may
require Publicis to withhold amounts from payments on the notes for taxes
or other governmental charges. If such a withholding should be required,
Publicis will pay to each holder of notes an additional amount so that
the net amount received by the holder will be equal to the amount the
holder would have received if no withholding had been required.
ADMISSION TO LISTING; TRADING
If the marketing agent so requests, Publicis shall use reasonable best
efforts to have the notes listed on the Premier Marche of Euronext Paris,
separately from the warrants.
GOVERNING LAW AND FORUM
The notes will be governed by French law. Any actions against Publicis
under the notes will have to be brought in the competent French court
located at Publicis's registered office, which is in Paris.
TERMS OF WARRANTS
Shares for Which Warrants Are Exercisable
Each warrant entitles the holder to purchase one Publicis ordinary share
at a price of euros 30.50 per share. The number of Publicis ordinary
shares to be received upon exercise is subject to customary anti-dilution
adjustments to reflect events affecting the Publicis ordinary shares, as
described below under the caption "Anti-Dilution Rights and Other
Adjustments."
EXERCISE SCHEDULE
Each warrant will be exercisable at any time after the 11th anniversary
through the 20th anniversary of the completion of the mergers. Warrants
not exercised by the 20th anniversary of the completion of the mergers
will become void.
ACCELERATION OF EXERCISE RIGHTS
Upon any accelerated exercise event, warrants shall become immediately
exercisable at the option of each holder. An "accelerated exercise event"
means any of the following:
o a public tender offer for 100% of the equity securities of
Publicis is commenced after such public tender offer has been
cleared by the relevant stock market authorities and a notice
signifying the opening of the offer has been published by these
authorities.
o Publicis transfers, or proposes to transfer, whether by means of a
sale, spin-off, merger, transfer of assets or other means, a
substantial part of Publicis's assets or business to a third
party, with a "substantial part" meaning any assets or business
representing one-third or more of the consolidated revenues of
Publicis based on Publicis's most recent financial statements.
o any person, directly or indirectly, alone or as part of a group of
shareholders, other than the group that consists of Elisabeth
Badinter (directly or indirectly through Somarel) and Dentsu,
obtains or is presumed to have acquired control of Publicis under
applicable French law. A change of control is also deemed to have
occurred if a third party acts in concert with the group
consisting of Mrs. Badinter and Dentsu and (1) Mrs. Elisabeth
Badinter no longer dominates such group, or (2) the third party is
a competitor of Publicis. "Control" has the meaning set forth in
article L.233-3 of the French Commercial Code.
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o Publicis's insolvency, court-ordered or voluntary liquidation,
settlement with creditors or bankruptcy filing.
Each holder of warrants who wishes to exercise warrants upon an
accelerated exercise event shall make a written request to the intermediary
holding his or her warrants, who must submit the request to the institution
responsible for servicing the warrants. Such a request is irrevocable.
SUSPENSION OF EXERCISE OF WARRANTS
Publicis is entitled to suspend, upon proper notice, the exercise of
warrants, for a maximum period of three months, in the event of an
increase of its registered capital, merger, spin-off or other transaction
which confers on shareholders a preferential subscription right or
reserves a priority subscription period for shareholders. Publicis's
decision to suspend the exercise of the warrants must be announced in the
BALO. The notice must be published at least 15 days before the date on
which the suspension takes effect and must state the effective date of
the suspension and the end of the suspension period. This information
will also be included in a notice in a nationally distributed financial
newspaper in France and to Euronext Paris.
ANTI-DILUTION RIGHTS AND OTHER ADJUSTMENTS
In compliance with French law, Publicis undertakes, so long as warrants
remain outstanding, to refrain from any amortization of its registered
capital or any modification in the distribution of profits. Nevertheless,
Publicis can create priority dividend rights shares without voting
rights, provided that the rights of the warrant holders are reserved
under the conditions outlined in the issuance contract. Upon the
occurrence of certain dilutive events described in more detail below, the
number of ordinary shares for which a warrant may be exercised will be
adjusted to maintain the rights of the warrant holders. Adjustment will
be made in accordance with French law and the terms of the issuance
contract so that the aggregate value of the number of shares for which a
warrant is exercisable immediately following such event is equal to the
aggregate value of the number of shares for which it was exercisable
immediately prior to such event.
These events include the following:
o an issue of Publicis shares with a listed preemptive subscription
right;
o a grant to Publicis shareholders of any financial instrument other
than shares of Publicis;
o a capital increase through capitalization of reserves, profits, or
issue premiums, and the grant of shares, stock splits or reverse
stock splits;
o an increase in the nominal value of the shares as a result of
capitalization of reserves, profits or issue premiums;
o a distribution of reserves or premiums in cash or securities;
o a merger or spin-off
o a repurchase by Publicis of its own shares at a price higher than
the market price; and
o the payment by Publicis of an extraordinary dividend.
In the event the registered share capital of Publicis is reduced due to
losses, whether by
37
reducing the nominal value or the number of shares, the nominal value or
number of Publicis ordinary shares for which each warrant can be
exercised will be reduced in proportion, as though the warrant holders
had been shareholders as of the issue date of the OBSAs.
SHARES ISSUED UPON THE EXERCISE OF WARRANTS
The new shares issued upon the exercise of warrants will be subject to
the statuts of Publicis and will accrue dividends in the current year.
Each such new share has the right to the same dividend as is paid to the
holders of the other ordinary shares. The shares will be freely
transferable and will be admitted to clearing by Euroclear France.
Publicis will take the necessary steps to have the shares listed on the
Premier Marche of Euronext Paris.
LISTING
Publicis will apply to have the warrants listed on the Premier Marche of
Euronext Paris and will use its reasonable best efforts to obtain
admission to trading within five business days after the closing date of
the mergers. Publicis will pay, among other things, but without
limitation, all fees, charges and commissions related to such listing.
GOVERNING LAW AND FORUM
The warrants will be issued pursuant to and will be governed by French
law. Any actions against Publicis under the warrants will have to be
brought in the competent French court located at Publicis's registered
office, which is in Paris.
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7. DESCRIPTION OF PUBLICIS
For important business and financial information about Publicis please
see the Note d'Operation that is available upon request from Publicis
Groupe S.A. (133, avenue des Champs Elysees, 75008 Paris, attention
Pierre Benaich, tel. +33 1 44 43 74 11) and is also available from the
internet at www.publicis.com.
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8. DESCRIPTION OF BCOM3
For important business and financial information about Bcom3 see the Note
d'Operation that is available upon request from Publicis Groupe S.A.
(133, avenue des Champs Elysees, 75008 Paris, attention Pierre Benaich,
tel. +33 1 44 43 74 11) and is also available from the internet at
www.publicis.com.
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FORWARD LOOKING INFORMATION
--------------------------------------------------------------------------------
This document contains certain "forward-looking statements" within the meaning
of the provisions of the United States Private Securities Litigation Reform Act
of 1995. These include statements regarding the anticipated closing date of the
merger transaction, anticipated tax consequences and anticipated future
operating results. Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts. They often include
words like "believe," "expect," "anticipate," "estimated," "pro forma," and
"intend" or future or conditional verbs such as "will," "would," or "may." The
factors that could cause actual results to differ materially from expected
results include, but are not limited to, the factors set forth in Publicis's and
Bcom3's filings with the Securities and Exchange Commission (SEC), delays in
completing the merger, difficulties in integrating the Bcom3 companies with the
Publicis divisions, changes in general economic conditions that may adversely
affect the businesses in which Publicis and Bcom3 are engaged and changes in the
securities markets. Readers are referred to Publicis's and Bcom3's most recent
reports filed with the SEC.
ADDITIONAL INFORMATION
Publicis and Bcom3 have filed a proxy statement/prospectus and other relevant
documents concerning the merger with the Securities and Exchange Commission
(SEC). We urge investors to read the proxy statement/prospectus and any other
relevant documents filed and to be filed with the SEC because these documents
contain important information. Investors may obtain the documents free of charge
at the SEC's web site, http://www.sec.gov. In addition, investors may obtain
documents filed with the SEC by Publicis free of charge by directing a request
to Publicis at 133, avenue des Champs Elysees, 75008 Paris, France. Investors
may obtain documents filed with the SEC by Bcom3 free of charge by directing a
request to Bcom3 at 35 West Wacker Drive, Chicago, IL 60601.
Bcom3 and its directors, executive officers and certain other members of Bcom3
management and employees may be soliciting proxies from Bcom3 shareholders in
connection with the merger. Information concerning the participants in the proxy
solicitation is set forth in the Annual Report on Form 10-K of Bcom3 for the
year ended December 31, 2001. Information concerning the participants in the
proxy solicitation is also set forth in the proxy statement/prospectus.
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