Maurice Levy, the chairman of Paris-based Publicis, said, "We have very quickly withdrawn, otherwise we would have been in a spiral. Just for ego or for face you offer more and that's not reasonable. ... We considered topping or matching WPP's offer, but because of the unusual cost of restructuring, it made it difficult.
"I said from the beginning [Cordiant]
Cordiant and WPP issued a statement Tuesday saying they had entered into an "exclusive and advanced negotiations with a view to the acquisition by WPP of Cordiant."
Though Mr. Levy would not comment on the size of the Publicis bid, the advertising company offered $411 million to both debt holders and shareholders, according to an executive close to the negotiation. The June 14 bid was made in conjunction with Cerberus Capital Management, a U.S. hedge fund. Mr. Levy maintained that Publicis only wanted select Cordiant assets, while Cerberus wanted to acquire Healthworld and Cordiant's Australian assets in order to grow them and sell them at a later date.
London-based WPP on June 16 raised its bid to $443 million for debt holders and an additional $17 million to $20 million for shareholders.
Possible stumbling block
WPP and Cordiant have all but declared the acquisition complete, but as of Tuesday, Cerberus appeared to be a stumbling block because it owns a significant chunk of Cordiant's debt, which stands at $431 million. It also remains to be seen how Active Value, a U.K. based investment company that holds a 16.7% stake in Cordiant, views the WPP offer. Active Value played a large role in the acquistion talks and had wanted to keep Cordiant out of receivership by installing new management.
When asked if he was disappointed not to have acquired Cordiant, Mr. Levy replied, "No, I feel relatively relaxed. I would have been pleased to have got some of the assets. I would have loved to have [direct and interactive firm] 141 Worldwide, but I will end up with Zenith Optimedia."
Cordiant owns 25% of media services company Zenith Optimedia Group; Publicis holds the rest. Mr. Levy would not comment on those negotiations.
Beginning of the end
Cordiant effectively went on the block back in April, when beverage giant Allied Domecq announced it was pulling its accounts out of the agency holding company. Mr. Levy said the departure of Allied Domecq accelerated rather than prompted the sale of the company. Cordiant had earlier lost clients Wendy's International and Hyundai Motor Co. -- both global accounts -- the Hyundai Dealer's Association and pharmacy chain CVS last year, and more recently the Royal Mail and Woolworth's in the U.K.
Publicis Worldwide, meanwhile, was able to land Allied Domecq's accounts that had been at Cordiant agencies.
Buyout for execs
With a deal hanging in the balance, Cordiant's senior management, CEO David Hearn and Chief Financial Officer Andy Bolland, stand to gain a major buyout. The two renegotiated their employment contracts after the Allied loss; Mr. Hearn stands to pocket $3.3 million and Mr. Boland is expected to take in $1.7 million, according to executives close to the negotiations. Meanwhile, shareholders have seen a 90% fall in the value of their shares.