Publicis to Outmanoeuvre Sorrell for Hand of Cordiant?

16 June 2003

After a weekend of tense negotiations, an alliance between Publicis Groupe and a US hedge fund may have dashed Sir Martin Sorrell’s plans to take over Cordiant Communications.

Publicis and Cerberus Capital Management plan to go to court today (Monday) to ask for stricken agency group Cordiant to be placed in administration while they divide up its assets.

The duo have been battling for control of the company since Friday night, when Sorrell’s WPP Group won the support of the Cordiant board with a takeover bid of £246 million ($413m; €347m). This would have paid off most of the ailing group’s debt and handed an undisclosed amount to shareholders.

Publicis and Cerberus (which has been steadily acquiring Cordiant debt in recent days) then responded with their own offer. This involves putting Cordiant into administration, repaying about 93% of the group’s debt, handing shareholders a token £10m (just over £0.02 per share) then splitting the assets 70–30 between the French ad group and the US hedge fund respectively.

Cue a higher offer from WPP, said to be “materially improved” on the rival bid. However, Publicis and Cerberus last night played their trump card, revealing that the latter has signed an exclusive agreement to sell the Cordiant debt it has amassed to its French partner only – undermining the WPP offer.

The action is expected to switch to the courts today, though Active Value Fund Managers – which has built up a stake in Cordiant of around 16% – may embark on an eleventh-hour bid to prevent an administration order.

Should Publicis triumph, the French group is expected to swallow up the flagship Bates Worldwide network, while Cerberus will take control of several peripheral agency assets.

Data sourced from: multiple sources; additional content by WARC staff