Cordiant shares suspended on LSE as bidding intensifies

MUMBAI: Top advertising groups are leaving no stone unturned in their bid to acquire troubled British ad agency Cordiant Communications. Trading in Cordiant shares was suspended this morning (16 June) on the London stock exchange even as the battle between rivals WPP and Publicis for control of the stricken advertising giant moved towards its end game.

The UK's Guardian reports that the French ad giant Publicis, backed by American hedge fund Cerberus Capital is close to finalising a deal for Cordiant. Cordiant owns the Bates advertising agency as well as several other marketing groups including the Financial Dynamics PR agency.

The report also added that it seemed as if WPP had won the battle for control of the indebted company after topping a ?244m offer from Publicis, only for the French advertising group to regain the upper hand late last night. The pendulum swung when bankers involved in the deal were informed that Cerberus, which has been buying up large chunks of Cordiant debt over recent days, had entered into an exclusive side deal with Publicis.

According to the report, Publicis proposed a complex takeover deal whereby Cordiant would be temporarily placed in administration and the assets shared between the two predators. However, the deal will leave shareholders only ?10m, or around 2p per share, to divide between them.

Last month, Cordiant was forced to issue a devastating profits warning, leaving it with little option but to sell up after drinks group Allied Domecq said it was terminating its relationship with Bates. Cordiant warned investors that it did not have enough working capital to last the next 12 months, even if two recently announced asset sales went through. The management attempted to sell or recapitalise the company against the wishes of 14.1 per cent stakeholder Active Value.

Publicis is said to be interested in acquiring the company to reunite it with Saatchi & Saatchi. Another option was a debt-for-equity swap, with one report suggesting US hedge fund Cerberus had already acquired 40 per cent of Cordiant's debt to line it up for such a deal.

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