WPP in Exclusive Talks with Cordiant
WPP Group has entered into exclusive, advanced negotiations to buy Cordiant Communications Group, outmaneuvering rival bidder Publicis Groupe.
WPP and Cordiant announced Tuesday that the majority of Cordiant’s secured lenders agreed to the talks. The two expect to “make a further announcement in the near future,” per a Cordiant statement.
The future of Cordiant’s promotion network, 141 Worldwide, is still uncertain. Insiders speculate WPP will align 141 offices with WPP ad agencies in the same cities. It is unclear how much, if any, of the 141 network will remain intact.
Allied Domecq has already begun moving its business to Publicis from Cordiant. Its contract with 141 Worldwide and sister shop Bates expires at the end of September. AD decided in April to shift its estimated $370 million account, prompted by Cordiant’s financial instability and loss of major clients (Xtra, April 29).
WPP handles Diageo, AD’s biggest competitor; AD wanted to get its business out of Cordiant in the event that WPP bought it. 141 Worldwide loses about $340 million in AD promotions and ad work. Sister ad agency Bates loses an estimated $30 million in advertising.
WPP, London, bid $413.8 million, with $397 million going to Cordiant’s debt holders (against an estimated $416 million debt) and another $16.8 million to Cordiant shareholders, The Wall Street Journal reports.
Meanwhile, Paris-based Publicis teamed with hedge fund Cerberus Capital Management—which holds 25% of Cordiant’s debt—to force Cordiant into bankruptcy and cherry pick its assets. Publicis offered to pay $427.8 million, with $411 million going to creditors if they agreed to the bankruptcy plan, and another $16.8 million to Cordiant shareholders. As a Cordiant creditor, Cerebrus may sign onto WPP’s deal by next week, The Wall Street Journal reports.
