Purchases Nearly 5% : A New Player, Quantum Media, Enters JWT Fray

A firm half owned by Los Angeles entertainment giant MCA said Monday that it has purchased nearly 5% of the embattled parent of the J. Walter Thompson advertising agency.

Quantum Media, a New York media and advertising firm, owns 4.7% of the JWT Group. Robert Pittman, Quantum Media’s chief executive, wouldn’t discuss the firm’s JWT holdings.

Quantum Media was formed by MCA and Pittman last fall to make media- and entertainment-related acquisitions and ventures. MCA has been rumored to be interested in buying JWT Group, but several top MCA executives have consistently declined comment.

JWT, also the parent of the Hill & Knowlton public relations firm, is being looked at by at least two other parties--a management buyout group led by New York investment firm Merrill Lynch, and the WPP Group, a British marketing services firm that has offered up to $50.50 a share to buy JWT.

WPP, led by former Saatchi & Saatchi Finance Director Martin S. Sorrell, said it was extending its offer beyond Monday. At the same time, WPP charged in Delaware Chancery Court that JWT directors are providing inside information to the management group led by Merrill Lynch.

WPP is also challenging in court the $30 million in “golden parachutes” that JWT directors awarded top executives two days before WPP made its initial $45-a-share bid for the company on June 10. JWT’s board approved the hefty severance payments, or golden parachutes, for 26 top executives, including JWT Chairman and Chief Executive Don Johnston.

The lawsuit asks the court to invalidate the golden parachutes and force JWT to provide WPP with the same information available to the group led by Merrill Lynch. JWT replied Monday that it has been fair to all bidders but had no comment on its talks with Merrill Lynch.

In another development, Bear, Stearns & Co, a New York investment firm, disclosed that it controls 7.33% of JWT shares, including 3.57% owned by Bear Stearns. The investment firm told the Securities and Exchange Commission that Bear Stearns may provide investment services for JWT in the future, but that no decision has been reached.

As previously reported, WPP has launched a hostile $45-a-share tender offer for JWT, but can’t start buying shares until July 11. WPP, which already owns 4.9% of JWT shares, wants JWT to expand its presence in advertising and public relations worldwide.

JWT shares continued to rise in anticipation of a bidding war for the firm. JWT share’s closed Monday at $52.75, up 75 cents in composite trading on the New York Stock Exchange.