WPP Seals £266m Cordiant Takeover

However, Cordiant will not come that cheap for WPP, as the buyout brings with it approximately £256 million of debt. WPP is assuming this debt from all but one of Cordiant’s former lenders; the lenders themselves will receive no further payments from WPP.

WPP’s offer values Cordiant shares at 2.4p, approximately half their value when they were suspended at the beginning of this week. Trading in the shares recommenced this morning and they had fallen to just 2.8p.

Cordiant’s board of directors have unanimously agreed to the deal with WPP, although other shareholders may not be as embracing. Active Value, the largest single shareholder in Cordiant with 17%, has endeavoured to keep the group independent by offering to change its management and inject more cash into the business (see Cordiant Shareholder Rules Out Deal With WPP). Active Value is reportedly planning to convene a shareholder meeting to discuss its proposals.

The scheme outlined by WPP and Cordiant will be sent to shareholders by the end of this month. They are expected to meet late in July, with the scheme – if agreed – becoming effective in early August. Another letter will be sent to shareholders today notifying them of the group’s intention to cancel the listing of Cordiant shares from 16 July 2003.

“The acquisition of Cordiant will make an important contribution to our long-term strategic goals – particularly in marketing services and expansion in Asia. Given that our approach has been widely welcomed by Cordiant’s clients, we also believe that a merger with WPP promises both stability and opportunity to Cordiant’s clients and people,” said Sir Martin Sorrell, group chief executive of WPP.

Cordiant’s chief executive, David Hearn, added: “The directors of Cordiant believe that Cordiant will have a sound future under the ownership of WPP. In the light of current circumstances, Cordiant believes that this Proposal provides the best outcome that is capable of being achieved for shareholders.”