Cordiant, the British parent of Bates Worldwide, last month agreed to remove its shares from the London Stock Exchange effective at the end of trading today to clear the way for its acquisition by U.K. agency holding company WPP Group.
Low shareholder payout
WPP last month agreed to give Cordiant
Cordiant's stock in recent weeks traded at a small premium to WPP's offer as Cordiant's largest investor, Active Value, accumulated shares in opposition to the WPP deal. But Cordiant stock plummeted today as it became less likely that Active Value could block the delisting of Cordiant stock. Its closing price values Cordiant at $1 million less than WPP's offer for the company.
Publicis denies rumors
The last day of trading for Cordiant shares was preceded by a statement from French agency giant Publicis Groupe Monday night that refuted rumors of a deal with Active Value and gave the first hint of Active Value's game plan.
Active Value, Cordiant's largest shareholder with a 28.75% stake, spent the weekend making a last ditch attempt to win Publicis' support to change control of Cordiant and block the delisting.
Publicis' statement said, "After first declining to meet, we finally met with representatives of [Active Value on July 12]. The proposal made to us... was declined because, amongst other things, it would have involved Publicis being a party to arrangements that may have led to a change of control of Cordiant."
$120 million option
The French communications group owns 75% of ZenithOptimedia. Cordiant, which controls the other 25%, has an option to sell its stake to Publicis for $120 million. WPP will inherit this option if its purchase of Cordiant goes ahead. But if Active Value succeeds in securing a change of control at Cordiant, the stake would then be sold for 25% of the capital value of Cordiant -- at current prices equivalent to about $4 million.
The delisting of Cordiant shares is designed to protect the $120 million payment from Publicis. Analysts believe that Martin Sorrell, WPP Group chief executive, would launch an immediate legal challenge if any attempt is still made to change control of Cordiant.
Publicis' statement added, "Publicis has had and continues to have no interest in acquiring, either directly or indirectly, shares in Cordiant." But the French group, although it denies any interest in Cordiant beyond the 25% ZenithOptimedia stake, left the lines of communication open by ending its statement with the words, "Publicis reserves its rights in relation to any commercial arrangements with Cordiant following a change of control of Cordiant."
Active Value refused to comment, but it is expected to vote against WPP's offer for Cordiant at a shareholder meeting July 23.
Meanwhile, Nahed Ojjeh, a Syrian-born Parisian billionaire who in recent weeks emerged as Cordiant's second-largest shareholder, raised her stake in Cordiant to 10.1% by the end of trading July 14. Ms. Ojjeh has not made her intentions clear, though Active Value and Publicis have said they are not working with her.