French advertising agency Publicis S.A. confirmed Tuesday what the industry already knew on Monday: It has agreed to buy London-based Saatchi & Saatchi PLC, a United Kingdom ad firm, for $1.9 billion.

The deal would make Publicis the world's fifth largest advertising company with a market capitalization of some $6 billion.

Publicis said it would rename itself Publicis Groupe SA after the deal is closed.

The Associated Press said Tuesday in an article datelined Paris, where Publicis is based, that Publicis "is eager to enter the U.S. market" where Saatchi's client list includes consumer products giant Procter & Gamble and computer giant Hewlett-Packard.

But Publicis entered the U.S. market two years ago when it acquired Utah ad agency EvansGroup in June, 1998, only a month after adding San Francisco-based Hal Riney & Partners to its roster.

Those two deals followed almost immediately after Paris-based Publicis said it was undergoing a broad restructuring and intended to increase its share of the U.S. market to 20 percent by 2000.

Tuesday's announcement showed it meant what it said. The Saatchi deal means 38 percent of Publicis' revenues will come from the U.S., with 49 percent from Europe and 13 percent from the rest of the world.

Jon Johnson, who went from being chief executive officer of EvansGroup to CEO of Publicis and Publicis Dialog, a marketing arm of the company, said at the time that the EvansGroup acquisition put Publicis among the top 15 ad agencies in the United States.

Dave Thomas, president of the Salt Lake Publicis office, said it's too early to assess the impact in detail on his firm but said he's sure it can only be positive.

"I think it's a wonderful thing for our organization to put ourselves in that elite circle of the top five ad agencies in the world," said Thomas.

Johnson was out of town Tuesday and unavailable for comment on the Saatchi deal's implications for his firm.

EvansGroup, founded in 1943 in Salt Lake City by David Evans, had offices in eight major cities in at the time of its merger with Publicis, including Seattle where it was the dominant agency, a market share that appealed to Publicis.

The acquisition of EvansGroup two years ago placed Publicis among the nation's top 15 agencies; Tuesday's announcement vaulted it 10 spots to fifth place.

The deal calls for Publicis to offer 1.64 of its shares for each Saatchi share, a premium of 51 percent over Saatchi's closing price on Friday and 19 percent above its closing price on Monday. In early trading Tuesday, Saatchi's shares were up another 4.3 percent, which analysts said reflected the full price paid for the company. Publicis shares were down 7.7 percent.

Publicis was clearly determined to boost its share of the U.S. market, home to half of the world's multinational companies. Last month it tried to merge with New York ad firm Young & Rubicam Inc. but was beaten out by Britain's WPP Group PLC which, in a takeover valued at $4.7 billion that made WPP the world's largest ad agency.

Saatchi & Saatchi is one of the world's best-known advertising agencies. Founded in the 1970s by two brothers, Charles and Maurice Saatchi, by the 1980s it had become the world's largest ad firm. The two brothers were forced out in the mid-1990s and in 1997, the agency was separated from its sister agency, Cordiant Communications.

Last year, Saatchi had billings of $7.5 billion, 12th highest in the world, while Publicis billed $10.3 billion, putting it in ninth place. The new mega-agency has a potential conflict in that Publicis represents French carmaker Renault and Saatchi's clients include Japan's Toyota.

Tuesday's announcement is a continuation of a trend in which the ad industry is concentrating into a relatively small group of super agencies with the global reach and versatility that multinational companies need in their advertising.


E-mail: max@desnews.com

Contributing: The Associated Press, Bloomberg News