3 Suitors Make Bids for Grey Global Group

The struggling Paris-based holding company Havas, along with WPP Group and Hellman & Friedman, have submitted bids for Grey, sources said.

Havas had faced opposition from French corporate raider Vincent Bollore, who has acquired between 5-10 percent of Havas’ shares this year, throwing the company’s pursuit of Grey into question. Bollore is said to have close ties with Deutsche Bank, which is supplying financing for the deal along with Societe Generale Group. Havas is believed to be offering Grey $1.45 billion. Also in the hunt: London-based WPP Group, which is not expected to pay a premium above Grey’s $1.3 billion market capitalization value, and San Francisco private equity firm Hellman & Friedman, which sources said is offering about $1 billion.

Those three suitors had been expected to bid on New York-based Grey. H&F and Havas did not return calls, though the latter issued a brief statement saying its board had approved a bid for Grey. A WPP representative declined comment, as did a rep from Grey.

H&F has previously taken stakes in Young & Rubicam and Digitas. Former Y&R CEO Mike Dolan is believed to still be advising H&F in its bid. Even if bid levels are later revised, H&F is the likely low bidder, given the fact it needs to realize a profit in reselling the New York holding company, sources said.

Given Havas’ own recent financial struggles, there has been some concern about the 10-year junk bond offering that Deutsche Bank and Societe Generale are providing Havas to finance the Grey deal. However, one obstacle in the way of a Havas bid appears to have been solved: The company said it will raise $609 million through a share rights offering to pay off $682 million of its convertible bonds coming due in 2006.

CEO Ed Meyer’s 20 percent stake in Grey is expected to bring him more than $200 million if the company is sold. Meyer could decide to keep Grey independent-if he views the bids too low-but few think that it is likely that the 77-year-old would want to wait to see if other bidders will emerge in the next few years.

At mid-afternoon on Wednesday, Grey’s stock was trading around $935 per share. For the day, the stock traded between $929.30 and $950.

See on photo: Grey CEO Ed Meyer