Cordiant Announces Demerger

Global advertising group Cordiant has this morning announced a three-way demerger of its businesses to create independently managed companies for Saatchi & Saatchi, Bates and Zenith.

Saatchi & Saatchi and Bates will each have listings in London and New York and will jointly own Zenith. Bob Seelert will become chief executive of the Saatchi & Saatchi group and Michael Bungey will be chief executive of the Bates group.

Cordiant believes that the demerger will allow the companies to “feel more directly accountable and responsible for their performance, placing their destiny in their own hands.” Decision-making will now be decentralised and this should allow a quicker response to client needs and opportunities as communication lines are shortened between client managers and senior managers. The separation will remove client conflicts and it is hoped that this will create new business opportunities. Bates especially is expected to increase its share of the global ad market by around 10%. The greater degree of autonomy given to Zenith is expected to allow it to develop a greater proportion of revenue from clients outside the Saatchi and Bates networks.

As far as the timing of the demerger is concerned, it is intended that formal proposals will be sent to shareholders during September with an Extraordinary General Meeting held in October. Listings for the new shares are expected to appear in December.

At 11:00am Cordiant’s shareprice had risen 7p to 137p.

Cordiant: 0171 436 4000