IPG Break Up Value Not So Tempting for Shareholders

Posted by: David Kiley on October 3, 2005

Interpublic Group of Companies Friday said it was posting a fresh $500 million hit to earnings as it restated its financial results since 2000. The continued drag on IPG’s financials, plus the loss of recent business, has had some wondering if the ad agency holding company might be worth more to shareholders busted up than held together.
Ad Age calculated that IPG would be worth about 6.3 billion broken up, not that much more than the $5.8 billion its worth today figuring debt, preferred stock and cash.
Remarkably, AA figures that Lowe Worldwide is worth but $300 million. Former chairman Frank Lowe spent more than that in IPG stock just acquiring overseas agencies and Formula One racing properties in the 1990s. Then again, he also spent, by one account, $15,000+ for a single men’s room door in his former NY headquarters (it was solid cherry and walnut). Deutsch would fetch just $150 million, says AA. IPG spent $200 million to acquire it just four years ago. Boy, that’s the way to value assets! Savvy chairman Donny Deutsch negotiated unrestricted IPG stock in the sale, and he dumped it and cashed out before the ink was dry. That’s the way to keep executives engaged!

McCann Worldgroup is the valuable one…worth $3.5 billion. And to think Frank Lowe regularly verbally defecated on McCann when he was on the company’s board of directors, criticing the quality of its creative reel.

 

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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