Erwin Guerrovich, Chairman and CEO of Intermarkets, made the following comments on Makdessi's interview in a letter to Arab Ad publisher Walid Azzi:
1. Although not the majority shareholder, I personally control well over 51% of our group and accordingly, the destinies of our companies.
2. Our by-laws stipulate that in case of disagreement on the share price, between existing shareholders, the share price is to be determined by an expert jointly appointed.
It is correct that our group, and shareholders individually, have offered to Mr. Hanna book value for his shares. Obviously, if Mr. Hanna is not in agreement, we shall go through the process as above indicated.
It is worthwhile however to clarify why we have offered book value. The reasons are:
-Through our so far 24 years of existence, Mr. Hanna has been active in the company only in 1971-1972 and again for another period in 1992-1994. He had no part in the regional growth of the group. As such, shareholders feel that in all fairness, Mr. Hanna should not ask for a market value share price since it is their sweat that built the company. Especially that Mr. Hanna interests are well taken care of.
His initial investment was well covered by dividends received. His limited initial investment having substantially grown at book value.
-In the late '70's, the Fattal organisation was our major shareholder. From the modest Lebanese ad agency of the early 70's, we have grown to a major corporation in less than 10 years, operating from our Bahrain HQ and ever expanding regional network. Mr. Bernard Fattal, with his legendary fair play inherited from his father, told us this: "You have built a major company outside of Lebanon and without our help.To our eyes, it is not fair that we be a shareholder and take the reward of your work as your business is a people business."
As a result of this superb stand, the Fattal shareholding was purchased at book value. Mr. Hanna as well as other shareholders, benefited from this attitude. Now that Mr. Hanna is in the seller position, we expect an equal sense of fairness.The above covers the major points related to us. However, for good order's sake, I would like to pinpoint a number of lesser important elements contained in the interview, that require correction.
-The indication of our group not having distributed dividends in the last 15 years is false.
-Mr. Hanna's shareholding is 36.6% not 42%.May I, dear Mr. Azzi, as an old corporate man and past consultant to many boardroom cases, complete this "mise au point" with my personal views.
-I believe this whole matter is a publicity stunt. Team is eager to get a WASP image (and I am certainly glad that a student of ours is aiming at leading the agency in this direction). And what best than being associated to the pioneer and most prestigious name in Middle East advertising. I cannot possibly think that Mr. Makdessi is serious.
-In the equity buying game, the basic rule is to have one's facts right. I cannot really believe that Mr. Makdessi is so naive as not to know this basic rule. It reminds me that at the starting point of his agency, Maurice Saatchi wrote to J. Walter Thompson offering to buy. He had neither the means nor the intention... but it gave him a lot of mileage in free publicity.In the case here, it does look like a publicity stunt... or could it be that Mr. Hanna took Mr. Makdessi for a ride?
Let us be serious! Conclusions of this saga, "tempete dans un verre d'eau", are:
-Mr. Hanna has declared intent to sell his shares, on which there is no turning back. Once the price agreed (either through mutual undemanding or by experts as stipulated in our by-laws), the group, and individual shareholders, will purchase Mr. Hanna's shares.
-Our group has always kept an open eye on opportunities, mergers and acquisitions. If Mr. Makdessi sees a fit with us, it is possible that he has a rationale unknown to us, as we are not familiar with his agency. If he indeed has an interesting one, we would duly consider it and positively consider absorbing his agency in our group.
(ArabAd)
