Cordiant Saga: Active Value Again Ups Stake

07 July 2003

Active Value Advisors struck again on Friday, further increasing its stake in Cordiant Communications to 28.75% – a mere one and a quarter per cent below the level that will automatically activate an offer under the rules of the UK Takeover Panel.

The AV move has bemused the entrail-rakers. Puzzles Susie Bell, an analyst at Teather & Greenwood: “If it’s going to make a bid, why is it being done incrementally? If it’s not going to make bid, what's the purpose of the buying?” Bell added that the additional value AV is squeezing from the shares is relatively “insignificant”.

It has just eight more days to acquire the extra 1.25% of Cordiant stock, as shares will be delisted on July 16 as a condition of WPP Group’s plan of arrangement for the company; and especially to protect the value of Cordiant’s ‘put option’ to sell its 25% stake in media network ZenithOptimedia [WAMN: 01-Jul-03].

[WAMN’s crystal ball is as cloudy as all others about AV’s motives – but just for fun let’s speculate in the absence of hard facts ...
• The individual value of Cordiant’s constituent parts is greater than the sum of the whole – especially as each component is unlikely to carry the baggage of group debt;
• AV’s holding would allow it to torpedo WPP’s bid - and it will do so;
• WPP will put Cordiant into administration - as it has threatened to do if its deal is thwarted;
• AV merrily cherrypicks the remains. Then consolidates and sells-off a leaner, meaner and altogether more valuable property.
Just guessing, of course – like everyone else!]

Data sourced from: The Wall Street Journal Online; additional content by WARC staff