Active Value, the UK investment fund, seems intent on wresting control of Cordiant Communications from WPP, despite being unable to court the support of French advertising group Publicis.
In a statement today, Publicis admitted that on Saturday it had met representatives from Active Value who “made a proposal regarding Cordiant and Cordiant’s shareholding in ZenithOptimedia group, which Publicis declined.”
Active Value is seeking to thwart WPP’s £266 million purchase of indebted Cordiant (see WPP Seals £266m Cordiant Takeover) and in recent weeks has increased its stake in the company to more than 28%. If it were to join forces with other investors and claim to represent more than 50% of the stock, it could argue that a change of control had occurred.
According to a report in yesterday’s Observer, Active Value could get backing from the Syrian-born billionaire, Nahed Ojjeh who has built up a 10% stake in Cordiant (see Mystery As Chess Queen Raises Cordiant Stake).
A change of control would trigger a clause enabling Publicis to buy Cordiant’s 25% stake in Zenith for a quarter of the group’s market value, around £3.5 million at current prices. As things stand, the French company is committed to paying £75 million to secure full control of the media buying operation.
Publicis said on Friday that it had no interest in making a takeover bid for Cordiant (see Publicis Denies Designs On Cordiant), which rejected its overtures in June, and has reiterated that Zenith is its only concern.
However, the stake building by Active Value and Mrs Ojjeh is clearly to the benefit of the French company and there is speculation that investors are holding out for a dividend reward which would far exceed the £10 million on offer from WPP. This could be the preamble to a fully-fledged move on Cordiant.
Maurice Levy, the chief executive of Publicis, has not ruled out further talks with Active Value but the ongoing saga has attracted the attention of the Takeover Panel which is investigating whether parties have been acting in concert to control Cordiant.
Shares in Cordiant were down 0.5p at 3.25p at 13:00 today.
