LONDON: British advertising giant WPP Group plc has entered exclusive talks to buy troubled smaller rival Cordiant Communications Group plc, putting it on the verge of plucking yet another deal from the grasp of French rival Publicis Group SA.
Reluctant to plunge into a bidding war, Publicis said late on Tuesday it would not raise its offer for Cordiant after WPP boss Martin Sorrell submitted a new bid that persuaded a majority of Cordiant’s lenders to pursue exclusive negotiations with his agency.
These developments marked a dramatic turnaround in the battle to acquire Cordiant, which has been laid low by ill-advised acquisitions, client defections and the continued slump in the advertising market.
Only a day earlier, Publicis and US hedge fund Cerberus Capital Management were set to go to court to force Cordiant into administration, similar to US Chapter 11 bankruptcy.
However, it was unclear what Cerberus’ intentions were on Tuesday night after Publicis said it would not top WPP’s bid.
A source close to the negotiations said a plan of arrangement detailing the contents of WPP’s bid and the agreement with Cordiant would likely be released by the week’s end.
WPP’s previous bid, submitted last weekend, had offered more than £246mil to Cordiant debt holders, and £10mil to shareholders.
The source said the bid did not involve WPP cutting a deal with Cerberus, a large dealer of distressed debt named after the three-headed dog that guards the entrance to Hades.
Meanwhile, Active Value, the largest Cordiant shareholder, which has fought to derail a sale and remove the company’s management, dismissed reports that it was mulling an alliance with WPP.
An Active Value spokesman said: “We are looking for the best way to get value for shareholders, and that means keeping Cordiant out of administration. There are no plans currently to launch a joint bid with WPP or any other party.”
Publicis CEO Maurice Levy said he did not want to be dragged into an expensive bidding war for Cordiant, adding that he had been assured that he may be able to buy Cordiant’s stake in ZenithOptimedia Group, which Publicis co-owns. – Reuters