Ad giant Interpublic – struggling with accounting woes and client defections – has lost a bid to throw out a shareholder proposal calling for a sale of the company.
The Securities and Exchange Commission denied the advertising holding company’s request to kill a proposal by an individual investor urging a sale to “the highest bidder.”
The SEC ruling, disclosed in a regulatory filing late Monday, means shareholders could vote on the resolution at the company’s next annual meeting.
Interpublic, which owns agencies McCann Erickson and Deutsch, confirmed last week that it would restate four years of financial results and acknowledged that “employee misconduct” played a role.
Management turmoil and a sagging share price are fueling rumors that the company is headed for a breakup or possible sale.
Despite the company’s problems, most analysts believe that an outright sale is unlikely, and they question whether the company would be worth more if it were broken up and sold.
“We do not believe there is a potential buyer for the whole company, strategic or financial,” Merrill Lynch analyst Lauren Rich Fine wrote in a report to clients yesterday.
With all its woes, Interpublic’s management had hoped SEC backing would prevent any legal repercussions if the company blocked the sale proposal. But the SEC declined to side with it, saying, “We do not believe Interpublic may omit the proposal from its proxy.”
Interpublic is scheduled to release its proxy on Oct. 7, provided that it meets an earlier deadline for producing audited financial statements.
The non-binding proposal – introduced by activist shareholder and psychologist Charles Miller – would not force a sale. Instead, the proposal would send a message to the company’s board if it receives shareholder support.