TN Technologies, the interactive unit of ad agency giant True North Communications (TNO), will acquire Modem Media, the first and perhaps the largest ad agency specializing in interactive media, in a $29 million stock deal, the companies announced today.
The combined companies intend to spin off from True North and file an initial public offering. A filing is expected in the next several weeks. Modem Media also will retain a substantial minority interest in the combined company.
Reports that True North would acquire Modem have circulated since May, when merger talks broke off between Modem and an interactive unit of Bozell, another giant ad holding company, broke off.
The merger will combine two of the biggest and best-known new media ad agencies. Modem and TN are active in the Internet, CD-ROMs, kiosks, online services, and interactive TV.
Modem, founded in 1987, will retain its name and become a unit of TN Technologies, which was founded in January 1995 and had about $20 million in revenue last year.
Greg Blaine, chairman and CEO of TN Technologies, will retain that position and run the combined firm. G.M. (Gerry) O'Connell, a founder of Modem Media, will serve as president and chief operating officer.
Modem partner and founder Robert Allen will become president of Modem Media, and cofounder Doug Ahlers will serve as president of TN Technologies' Relationship Technology Group.
At the deal's closing, expected in November, Modem will receive $25 million in common stock in publicly traded True North, parent of the interactive firm. Modem will receive an additional $4 million in True North stock upon completion of the IPO.