The future of stricken agency group Cordiant Communications continues to hang in the balance after WPP Group filed a new bid.

WPP forced its way back into the running with an eleventh-hour proposal. Details are not yet known, though a WPP spokesman described the new offer as an “alternative not higher” than its previous bid to repay most of Cordiant’s £260 million ($438m; €370m) debt and give a token £10m to shareholders [WAMN: 16-Jun-03].

At the close of the weekend, a partnership of Publicis Groupe and US hedge fund Cerberus Capital Management seemed to have the upper hand, having blocked a WPP takeover bid with their own plan.

The duo hoped to force London-headquartered Cordiant – parent of Bates Worldwide – into administration then carve it up between them. Their trump card was a side deal whereby Cerberus agreed to sell the significant amount of Cordiant debt it has amassed to Publicis alone, undermining WPP’s offer.

True to plan, trading in Cordiant shares was suspended Monday “pending clarification of its financial position” – a move expected to precede a voluntary move into administration ahead of a break-up at the hands of Publicis and Cerberus.

However, Sir Martin Sorrell is nothing if not a canny negotiator, and he is said to have approached Cordiant’s banks to tell them they were being browbeaten into accepting the US hedge fund’s terms when a better deal (i.e. WPP’s) was on the table. Suitably vexed, the banks then reportedly pressured Cordiant into holding a proper auction.

As a result, Cordiant did not seek an administration order and it is far from certain it now will. The group called a 4.30pm deadline for bids, and now has the new WPP offer to consider as well as the Publicis/Cerberus deal.

Whichever group wins, shareholders are likely to be the losers. Both bids are understood to offer stock holders around £10m – half Cordiant’s market value of £20m when shares were suspended.

However, in a new twist, WPP is said to have begun talks with Active Value Fund Managers, which holds around 16% of the stock, to explore co-operation. Active Value has opposed a takeover, and claims to have the support of 36% of Cordiant investors – a potential obstacle to WPP, whose bid would need 75% shareholder support to succeed.

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