Cordiant Mystery Sharebuying May Centre on Zenith Stake

10 July 2003

A possible solution to the mystery of the month.

Why on earth would two such disparate and calculating entities as Active Value Advisors and billionairess Syrian chess groupie Nahed Ojjeh pay well over the current share price to build their stakes in Cordiant Communications (respectively standing at 28.75% and 10.7%) now WPP Group’s offer has been declared final?

Here's a hypothesis with the ring of credibility.

On Tuesday evening unnamed ‘inside sources’ fingered Cordiant’s 25% stake in ZenithOptimedia, the global media network majority-owned by Publicis Groupe – whose bid for Cordiant was trumped by WPP earlier this year.

Cordiant has a ‘put option’ to sell its stake to Publicis at a fixed price of £75 million ($124.95m; €108.76m). But should ownership of Cordiant change hands [WAMN’s italics], the price changes to 25% of Cordiant’s quoted share price – currently worth little more than £2 million. This would trim the purchase price by seventy-three million pounds sterling.

The voluble ‘inside sources’ suggest that Paris-domiciled Ojjeh is ‘close’ to leading investors in Publicis. And while there is no suggestion that these respected citizens have ever discussed such a possibility, should Mme Ojjeh and Active Value ever decide to harmonize their holdings, they would together control 39.45% of Cordiant – just 11.55% short of a change in ownership.

Such a change would activate the lower purchase price payable by Publicis for Zenith – along with a whole range of other interesting future possibilities for the hapless Cordiant.

Data sourced from: Times Online (UK); additional content by WARC staff