Saatchi & Saatchi Goes to France's Publicis

On Tuesday, Saatchi & Saatchi is to announce that it will be taken over by French advertising group Publicis in a deal likely to be worth at least 1 billion pounds.

Shares in Saatchi jumped 27%, to 421p Monday as it announced it had received a "merger offer". The offer from Publicis, however, is likely to be structured as a full takeover bid for the UK advertising agency and is likely to be entirely in paper.

Analysts were tonight speculating that Publicis could seek a listing for its shares in London after the takeover, partly because of the reluctance by UK pension fund managers to accept shares in European companies.

The deal comes two-and-a-half years after Saatchi gained independence from Cordiant Communications in a demerger. Saatchi is one of the best-known advertising agencies in the world but is also one of the smallest in a consolidating industry. WPP and Omnicom are the world's biggest and earlier this year Publicis lost out to WPP in the race to buy New York firm Young & Rubicam.

Saatchi & Saatchi no longer has any links with its founders, Maurice and Charles Saatchi, who run the rival M&C Saatchi, but its brand name still carries muscle. Consumer brands giant Procter & Gamble, one of the world's biggest advertisers, accounts for almost 20% of its turnover.

The imminent takeover lifted the share prices of other advertising and marketing companies. Cordiant rose 12%, to 333p.