WPP, the advertising group headed by Sir Martin Sorrell, is set to launch a bid for ailing rival Cordiant Communications, according to Sunday press reports.
Cordiant has been the subject of takeover talk for most of this year, having borne the brunt of the advertising downturn (see
Market Downturn Takes Toll On Cordiant). The company has debts estimated at more than £200 million and has recently suffered key account losses (see
Cordiant Shares Nose-Dive As Major Client Walks).
Sorrell initially distanced himself from any bid, leaving French advertising giant Publicis as the most likely suitor. However, the Observer and Sunday Times said this weekend that WPP had held talks with Cordiant’s advisor, UBS Warburg, and was considering making an offer.
However, the company faces stiff competition from Publicis, which jointly owns Zenith Optimedia with Cordiant, and Grey Advertising. The latter is understood to have joined forces with Cerberus Capital Management, a US hedge fund.
Cordiant has funding in place to sustain operations until 15 July (see Cordiant Gets Breathing Space From Creditors), by which time it must provide assurances about its future in order to secure new financing.
If a buyer does not emerge, management may opt for a debt-for-equity swap under which creditors would receive shares in the group (see Cordiant Looks For Survival Plan). The other alternative is for Cordiant to press on with its programme of disposals. Last week, the company raised £25 million from the sale of Australian assets, which included George Patterson Bates (see Cordiant Completes Sale Of Australian Assets).
Shares in Cordiant were up by 0.75p at 6.25p at 11am today.
