CORDIANT CLOSES BATES WEST AGENCY
Irvine Office Still Houses Staff of 141 Worldwide, XM
CORDIANT UNVEILS BATES GROUP
Marketing Services Agencies Integrated Under New Management Structure
BATES STAGGERED BY WENDY'S LOSS
Cordiant Options Narrow
BILL WHITEHEAD RESIGNS FROM BATES
Worldwide CEO Says U.S. Business 'Not Enjoying the Best Time'
The loss is a blow to the company, which has struggled with huge debt and is currently selling off a number of divisions. The move may force Cordiant, which was due to announce preliminary results April 30, to suspend trading on the London Stock Exchange. A decision hadn't been reached by press time.
In a statement, Cordiant said the global account was estimated to be worth about $27 million, some 3.4% of the group's revenue in 2002.
Cordiant's stock dropped by 65% today, hitting a low of nine pence, and closed at 9.75 pence (16 cents) on the London markets. Cordiant's stock, traded in the U.S. as American depositary receipts, plummeted 60% to 90 cents in early-afternoon trading today. Volume trading was over 45 times higher than average at 138,900 shares by mid-afternoon.
Cordiant was informed April 25 that its contract with Allied Domecq will terminate in October 2003. The spirits giant has begun a review for the brands Cordiant agencies were handling, including Ballantine's whiskey, Tia Maria liqueur and Malibu rum, handled by Bates Worldwide, and promotional marketing efforts for its nine core brands handled by 141 Communicator, London and New York.
The advertising accounts for core brands including Beefeater gin, Sauza tequila, Maker's Mark bourbon, Stolichnaya vodka and Canadian Club whiskey, which are currently at Publicis Groupe's Publicis, London, and the Courvosier promotional business handled by GlobalHue, Southfield, Mich., are unaffected.
Simon Stewart, Allied Domecq senior vice president for marketing, is handling the review, already in progress. A company spokesman wouldn't comment on which agencies are bidding on the business.
U.K.-based Allied Domecq is the world's No. 2 distiller behind Diageo and is also the parent of quick-service restaurants such as Dunkin Donuts and Baskin-Robbins. It is the latest Cordiant client to preemptively abandon the sinking company. Wendy's International and Hyundai Motor Co. -- both global accounts -- and Hyundai Dealer's Association left the network in the past 12 months, and more recently the Royal Mail and Woolworth's in the U.K. have departed.
In a separate event, Paul Stead, global CEO, Fitch Worldwide, Cordiant's branding and consulting unit, has left the company, "He's resigned and intends to return to New Zealand," a spokeswoman for Cordiant confirmed today. Mr. Stead led Fitch since it was formed in 2000.