Cordiant tells where pieces fit
as Bates and Saatchi 'demerge'

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Cordiant, London, said its planned "demerger" will create two separately listed companies: Saatchi & Saatchi Plc and the newly named Cordiant Communications Group, comprised primarily of Bates Worldwide and the German-based agency network Scholz & Friends. The demerger must be approved by shareholders at an Oct. 23 meeting and, if approved, would take place Dec. 12. Details were unveiled in London and New York today. Cordiant also said interim results for the six months ended June 30, 1997, showed pre-tax profit up 30% to $33 million on a 7.2% increase in revenue, to $584 million.

Cordiant Communications Group (CCG) will include: Bates Worldwide, Scholz & Friends, event marketing and branding group HP:ICM, a 30% stake in Facilities Group, a production unit, and a 50% stake in Zenith, the media buying and planning unit. Its main unit will be Bates Worldwide, in 1996 the 13th-largest worldwide agency network by gross income. It will operate Scholz & Friends as a second, independent international network to minimize the impact of client conflict policies.

On a pro forma basis, CCG had in 1996 a pre-tax profit on ordinary activities of $36 million on revenue of $548 million.

The new Saatchi & Saatchi Plc will include: Saatchi & Saatchi Worldwide, in 1996 the 11th-largest worldwide agency network by gross income, the public relations company Rowland Worldwide, the advertising agency Cliff Freeman & Partners, corporate identity consultancy Siegel & Gale, 70% of Facilities Group and 50% of Zenith.

In 1996 on a pro forma basis, Saatchi & Saatchi Plc would have had a pre-tax profit of $36 million on revenue of $623 million.

Zenith will be independently managed but equally owned by CCG and Saatchi & Saatchi Plc. In 1996 on a pro forma basis, it had pre-tax profit of $14 million on revenue of $79 million. CCG and Saatchi will enter into an agreement under which they will use Zenith as their exclusive supplier of media services, subject to certain conditions, until at least Dec. 31, 2000.

Michael Bungey will become CEO of CCG. Other executive directors include: Alex Hamill (Bates Asia Pacific), Peter Schoning (Scholz & Friends), Bill Whitehead (Bates North America) and Jean de Yturbe (Bates Europe). Bob Seelert, Wendy Smyth and Kevin Roberts will resign as executive directors of Cordiant and take new posts as executive directors of Saatchi & Saatchi Plc. Charlie Scott will become the non-executive chairman of both CCG and Saatchi & Saatchi Plc. After a one year transition period, Mr. Scott expects to relinquish his responsibilities in one of the groups.

Copyright September 1997, Crain Communications Inc.

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