Publicis is being sued for over $10 million by the founders of a British creative agency it acquired

pulse

February 14, 2017 5:39 PM

The founders and eight executives who held minority shares of the creative agency Kitcatt Nohr Alexander Shaw (KNAS) are suing Publicis Groupe for up to $6.1 (£4.9) million in unpaid earn-outs and $4.5 (£3.6) million in breach of contract damages, according to Campaign.

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The former heads and managers of the creative agency are alleging that "critical information" was withheld from the former shareholders of KNAS in "circumstances so appalling that Publicis’ own employees have subsequently reacted with embarrassment and guilt."

Publicis Groupe acquired KNAS in 2011 to merge it with what was at the time the London Digitas office.

A Publicis spokesperson told Business Insider: "Publicis Groupe's policy is to not make any comment about pending litigation, other than to say that we are vigorously defending ourselves against the claims."

The terms of the earn-outs were linked to the performance of the agency formed out of the acquisition. When the KNAS team found out 52.7% of Digitas UK's revenue came from Procter & Gamble, they wanted to be sure of the strength of the relationship and were told it had the "confidence of a retainer."

The claimants are alleging the "impending loss of Digitas UK’s P&G business had in fact been widely anticipated within Publicis and Digitas UK since as early as July 2010," before the acquisition of KNAS was completed.

A significant part of Digitas UK's work came through other agencies in the Publicis Groupe network. The claimants are alleging these agencies implemented a "deliberate strategic pivot" to retain the work for themselves.

The case was opened in London this week and is ongoing.

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