WPP Group has now agreed a takeover of Cordiant Communications, whose board has given the deal unanimous approval.
The pact will see WPP (which outbid Publicis Groupe) issue one new share for every 205 Cordiant shares, valuing the stricken agency group’s total stock at just £10 million ($16.8m; €14.1m) – a far cry from its market peak of £1.3 billion in 2000.
In addition, WPP will take on £256m of Cordiant debt. It revealed it has already acquired around £177m, with one final lender holding around £79m. WPP plans to fund the takeover via a £100m share issue, depending on the state of the market.
“In the light of current circumstances, Cordiant believes that this proposal provides the best outcome that is capable of being achieved for shareholders,” commented the ailing company’s ceo David Hearn.
Cordiant shares, which were suspended on Monday [WAMN: 17-Jun-03], will resume trading today before the company’s stock exchange listing is withdrawn on July 16. The deal is dependent on the approval of 75% of shareholders.
“The acquisition of Cordiant will make an important contribution to our long-term strategic goals - particularly in marketing services and expansion in Asia,” declared triumphant WPP boss Sir Martin Sorrell. “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.”
One client considering its options, however, is Seat, which is handled by Cordiant flagship Bates Worldwide. The auto firm is concerned about conflict, given that WPP’s biggest single client is Ford Motor Company.
Data sourced from: multiple sources; additional content by WARC staff