Media buying agencies Optimedia and Zenith Media are to be merged by their parent companies, Publicis and Cordiant respectively, creating the world’s fourth-largest media communications group.
The resulting business, NewCo, will be UK-based and 75% owned by Publicis and 25% owned by Cordiant. The minimum option price payable for Cordiant’s 25% shareholding in NewCo is £75.0 million (€121.0 million) in cash.
Publicis says that NewCo will provide a stronger and more effective media communications service to clients.
Under the terms of the deal, NewCo will effectively acquire Zenith Media and Publicis will transfer or sell certain Optimedia operations into NewCo. The transaction is expected to close in September 2001.
In the year ended 31 December 2000, the Optimedia business to be subsumed by NewCo had aggregate revenues of £55.9 million and pre-tax profits of £12.6 million and Zenith had revenues of £67.5 million and pre-tax profits of £13.7 million. The combined net liabilities of Zenith and the Optimedia units was approximately £10.3 million as at 31 December 2000.
Michael Bungey, CEO of Cordiant, said: “We have exhaustively examined the options for Zenith and I am sure that this is the best solution for our shareholders, our clients and Zenith’s people.”
Maurice Lévy, CEO of Publicis add: “The media specialists are in the ascendancy and the current market conditions can only reinforce this trend. In creating the fourth largest global player in the field, we are leveraging the potential of two market leaders.”
