Washington Redskins owner Daniel M. Snyder yesterday agreed to sell his Bethesda marketing firm, Snyder Communications Inc., to Havas Advertising of France for stock worth about $2.1 billion.
The deal ends a remarkable voyage for Snyder Communications, which started from the ruins of a failed business only 12 years ago and generated enough money to help its founder become principal investor in last year's $800 million purchase of the Redskins.
Havas will pay Snyder investors the equivalent of $29.50 per share by giving them Havas shares that will trade on U.S. markets. That's a 44 percent premium over Snyder's Friday closing price of $20.50 a share.
Daniel Snyder stands to get more than $275 million worth of Havas stock for his 9.4 million shares of Snyder Communications.
The energetic, 35-year-old entrepreneur said he will hold on to the stock and not use it to pay down the $350 million he borrowed to buy the football team. But Havas's purchase of his company will leave him more time for football, he acknowledged.
"Absolutely. You can write that. That's what I want, to bring home a Super Bowl trophy for the Redskins," Snyder said in an interview.
The sale was set in motion late last year following an unsolicited offer for the company by the London-based WPP Group, for about $25 a share, according to sources. The overture occurred at a time when Snyder was deeply frustrated by his company's poor stock performance, which he felt was unjustified, associates said.
As other companies got into the bidding, Snyder said he decided to make the sale because a new round of marketing industry mergers was beginning, and "we wanted to be an organization that controlled our own destiny."
In December, Snyder hired the investment firm Deutsche Banc Alex. Brown to solicit offers. Other bidders, sources said, included the U.S. advertising firm Omnicom Groupseek and an Internet company whose identity has not been learned. WPP dropped out as the price climbed.
Snyder said he chose Havas based not just on its offered price but on the ability of the companies to blend together. With no conflicting clients and a need on Havas's part for stronger direct marketing capability, "the sum of both together really winds up being a tremendous powerhouse," Snyder said.
Following the deal, Havas will have $2.2 billion in annual sales and 20,000 employees in 75 countries. Nearly half of its business will be in the United States, up from about 30 percent for Havas today. Snyder Communications' revenue totaled $465 million over the nine months ended in September.
Havas said it plans $3 million worth of job cuts at Snyder's Bethesda headquarters, which employs about 700 workers. Snyder said those moves will involve only a small number of people in departments that overlap with the new company, such as regulatory reporting and legal affairs.
The transaction has been approved by the boards of both firms. Pending regulatory approval and the vote of shareholders, the companies expect the deal to close by the middle of the year.
The deal includes four basic Snyder entities: the advertising firm Arnold Communications, which created the campaign for the new Volkswagen Beetle; Bounty SCA Worldwide, a marketing services firm; Brann Worldwide, which is the world's biggest direct-marketing business; and Snyder's 17 percent interest in Circle.com, a recently formed Internet services unit based in Baltimore.
Snyder would remain at the helm of his company only until the deal closes, preparing for the transition. "Then I'm going to evaluate my options," he said. "Obviously, I've been paying a lot of attention to the Redskins and will continue to do so."
While he said he was "not going to be full time to the Redskins," he said he was anxious to have more time to prepare for this spring's draft of college players.
The deal "gives me a little more time, but that wasn't the driver for this," he said.
Football was on his mind during negotiations, though. Snyder said that Havas Chairman and chief executive Alain de Pouzilhac owns a rugby team in France. At a dinner in New York, the two men exchanged jerseys. "I told him he better become a Redskins fan," Snyder said.
Snyder; his sister Michele, the company's president; and several other key executives are expected to launch a new business venture once the Havas deal is concluded. Snyder remains co-chairman of Ventiv Health Inc., a health-care marketing company spun off from Snyder Communications last year.
Snyder also noted his involvement on the boards at Children's Hospital and the Center for Missing and Exploited Children, as well as with several New York investment partnerships.
Otherwise, Snyder was vague about his intentions. "I think in my lifetime I will be involved in many a commercial venture," he said. "What really excites me is two things: The business community . . . and second and most important is to win a Super Bowl for the Redskins."
Snyder is known for his demanding, relentless business drive. He started Snyder Communications after raising--and losing--several million dollars of investors' money in a unsuccessful college magazine venture. He then began focusing on an around-the-clock marketing push on Fortune 500 companies.
He and a small staff tackled any assignment they could bluster their way into, from distributing diapers to marketing long-distance telephone services for non-English-speaking immigrants.
In 1996, he took Snyder Communications public. Through three stock offerings, Snyder raised $626 million and used that money to buy more than a dozen advertising and marketing companies.
At its peak in 1998, revenue had grown tenfold to more than $800 million. Snyder Communications had become the largest direct-marketing firm in the world, a major contract seller for drug companies, and a communications manager for corporations such as International Business Machines Corp., Gillette Co. and Kellogg Co.
But while Snyder's revenue has steadily grown, the company's stock value has been in decline since its acquisition spree died off in 1998.
To help revive the company's standing on Wall Street, Snyder reorganized last fall. He spun off its health-care marketing division to form Ventiv Health and consolidated Internet services into a subsidiary called Circle.com, which has its own publicly traded "tracking stock."
None of these moves revived the Snyder stock, however. In April 1998, a share of Snyder was selling for more than $53; in October 1999 following the spinoffs, the stock hit a low of less than $9 a share.
"The moves created a lot of confusion [among investors], and in a high-growth market, confusion doesn't help you," said Snyder Chief Financial Officer Clay Perfall.
The stock price issue left the company founder greatly frustrated, associates said, and unhappy at financial analysts' speculation that his attention to his business had been distracted by his passion for the Redskins. That primed the pump for a sale when the outside bidders arrived.