> Cordiant's Tuesday statement
CORDIANT'S BATES LOSES ALLIED DOMECQ ACCOUNT
It characterized the unnamed contact as a "very preliminary approach."
The announcement comes one day after the company lost beverage giant Allied Domecq as a client and as its stock value declined to a point 97% below its 2000 peak.
Cordiant's announcement about the loss of Allied Domecq's $27 million account forced the marketing services company to reconsider its business strategy and begin potential sale talks.
Speculation is mounting that Publicis Groupe could be the company in talks about a potential deal with Cordiant. There is no official confirmation of this. Publicis could not be reached, and a Cordiant spokesman refused to comment on who potential bidders might be. The spokesman said it was still hoping to issue 2002 preliminary results on May 1, without the need to suspend trading.
Other sales impacted
An agency executive, close to talks, said any Cordiant negotiations of a sale would likely put the brakes on plans to sell its divisions. The executive said Cordiant was "at the 11th hour" stage of negotiations to sell its PR agency, Financial Dynamics; ad agency Scholz & Friends; and a portion of its Australian ad agency, George Patterson Bates.
Paul Richards, a media director at Numis Securities in London, expects trading of Cordiant shares to be suspended on Thursday but said, "I'd be surprised if the banks pulled the plug. They'd be more likely to get their money back if Cordiant is allowed to trade its way out of trouble, especially as the mood is optimistic for 2004."
He believes that the three deals -- for disposal of Scholz & Friends, George Patterson Bates and Financial Dynamics -- were on the verge of completion, and said that Cordiant was expecting to "clear the decks" this Thursday by revealing details of a financial restructuring and news of the three key disposals at its 2002 results briefing.
Relationship with Publicis
Publicis already has a strong relationship with Cordiant. Publicis owns 75% of media buying operation Zenith Optimedia, with Cordiant holding the balance. Cordiant had already planned to sell its stake in Zenith come January 2003. Publicis is also understood to be in the running for the Allied Domecq brands that will be parting with Cordiant in October 2003.
A Cordiant spokesman refused to comment on which parties had made approaches to the firm. A bid by WPP Group appears unlikely, according to executives close to the marketing services company.
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Emma Hall contributed to this report.