CORDIANT DENIES TALK OF TRUE NORTH UNION: U.K. COMPANY'S STOCK SURGES AS LONGSTANDING SPECULATION RENEWED

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When the quarterly directors meeting for True North Communications convenes today, there will be no escaping the topic of a possible acquisition of or merger with Cordiant Communications Group, parent of Bates Worldwide.

Given the flurry of speculation last week that the two agency holding companies were in talks, True North's directors likely have no choice but to discuss it.

Conjecture of a sale or merger of the two companies stretches as far back as four years ago. Now there is talk it could come in a few hours or a few months.

TIMING QUESTIONED

While most observers don't question why a union between Chicago-based True North and London-based Cordiant makes sense, some do question the timing of current talks since there's a liability for any U.S. group acquiring Cordiant at this point.

A pooling-of-interests accounting treatment favored by U.S. companies when they buy U.K. businesses can be used only when the acquired company has been a separate entity for two years.

For Cordiant Communications Group, formed in December 1997 with the breakup of Cordiant PLC, that will happen at the end of 1999.

"By pooling, the company issues U.S. stock for a U.K. company so they don't have to write off goodwill against earnings," said Lorna Tilbian, an analyst at U.K. stockbroker Panmure Gordon.

True North, the parent of Foote, Cone & Belding and Bozell Worldwide, declined comment. Cordiant released a statement to the London Stock Exchange last week that read: "No discussions are taking place which may lead to an offer being made for the company."

Cordiant's stock jumped in London on word of a possible acquisition or merger, closing at $2.32 Friday, up 16.6% for the week.

Norbert Lindhoff, CEO of Cordiant-owned Scholz & Friends, Hamburg, said his agency has received assurances that Cordiant is not up for grabs.

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