True North shareholders sue Interpublic
NEW YORK - Shareholders in True North, the FCB-owning advertising group acquired by Interpublic in 2001, have filed a lawsuit alleging that the company mislead them prior to the $2.1bn (£1.3bn) acquisition.
The Interpublic Group of Companies already faces several lawsuits from disgruntled investors relating to its accounting problems and the subsequent collapse of its share price.
According to reports, the latest suit was filed in Illinois and charges Interpublic and its management with misleading shareholders in True North by not disclosing charges. The failure to disclose these charges led to Interpublic restating $181.3m (£114m) in earnings in November.
True North was led into the merger by David Bell, who was chairman and CEO of True North. He was vice-chairman of Interpublic, heading the Partnership and was recently moved sideways to oversee the Advanced Services Division within Interpublic following the accounting scandal.
In a filing with the Securities & Exchange Commission, Interpublic confirms that it is facing lawsuits and that it is also being investigated by the Internal Revenue Service over federal income tax returns from between 1994 and 1996.
Interpublic said in the filing: "The company intends to vigorously defend the actions discussed above. While the proceedings are in the early stages and contain an element of uncertainty, the company has no reason to believe that the final resolution of the actions will have a material adverse effect on its financial condition. "
In total, it faces four lawsuits. Interpublic is due to respond to one of the suits, filed in Delaware Court of Chancery, New Castle County, on December 20.
Shares in the company were trading down by 0.88% yesterday at $13.45, down by 12 cents.
Interpublic acquired True North in 2001, in a deal that created the world's largest advertising holding company, and added Foot Cone & Belding to Interpublic's advertising agencies, which already included McCann-Erickson Worldwide and Lowe & Partners Worldwide.
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