RealTime IT News

Organic Board Recommends Seneca Buyout

The board of directors of San Francisco-based interactive shop Organic recommended that stockholders agree to sell their shares to Seneca Investments -- paving the way for a buyout and potentially, a merger.

In September, New York-based Seneca, a holding company set up in a joint venture between ad agency giant Omnicom and venture capital outfit Pegasus Partners, offered $0.33 in cash for each publicly-held share of Organic.

The unanimous approval by Organic's board, and a special board committee comprised of independent directors, means the firm is one step away from becoming another Seneca-owned interactive agency.

Through its association with Omnicom, Seneca owned a 22 percent stake in the firm. Earlier this month, Organic's founding executives sold their shares to Seneca at about $0.16 per share, giving the company control of about 80.9 percent of Organic's outstanding shares.

To complete the buyout, Seneca now needs only the commitment of the owners of 9.1 percent of the company's outstanding shares. Should Seneca gain control of 90 percent of Organic's stock, every remaining share will be converted into the right to receive $0.33 in cash.

As a result, the stage is set for Organic to become a sibling of cross-country rival Agency.com, which Seneca bought out in August. (Seneca also merged Red Sky Interactive into Agency earlier this year.)

Whether Seneca's buyout will ultimately result in a merger of New York-based Agency and Organic remains unclear. Executives at Seneca, which was formed to consolidate Omnicom's investments in several public and private interactive agencies, have said little about their intentions, and through spokespeople, have routinely declined to speak to the media.

Also unclear is whether Razorfish will be included in Seneca's roll-up. The holding company maintains about an 8 percent stake in the firm, though since May it has been steadily reducing its ownership, down from its original 11.5 percent stake.