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Bates to Be Linked to JWT, Y&R and Red Cell

By Published on .

NEW YORK (AdAge.com) -- WPP Group advertising networks J. Walter Thompson, Red Cell and Young & Rubicam look to be the main beneficiaries from WPP's pending acquisition of Cordiant Communications Group.

Agency alignments
In a conference call with analysts in the U.K. this morning, WPP's chairman and chief executive, Martin Sorrell, said: "In the U.S. it might make sense for [ad network] Bates [Worldwide] to move closer with Thompson, and maybe in the U.K. There is some sense in Red Cell working closely with Bates Europe. In Asia, Bates and Dentsu Young & Rubicam work closely together, though there are alternatives to that. Red Cell is in Asia as well."

Dentsu Young & Rubicam is a joint

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venture between Japan's largest ad agency, Dentsu, and Young & Rubicam.

Death for Bates?
While most people view WPP's acquisition as the death knell for the Bates agency, Mr. Sorrell said the name would not disappear completely. "We'll keep it alive where it makes sense."

While Ogilvy & Mather doesn't initially appear to be gaining any Cordiant assets, Mr. Sorrell told Adage.com today that onlookers should "wait and see."

Mr. Sorrell added he would like to see Cordiant's branding and design consultancy Fitch Worldwide; direct and interactive firm 141 Worldwide; and health-care specialist Healthworld all retain their individual brands. Underlining his belief that clients are seeking out a more diverse range of specialty marketing solutions, Mr. Sorrell made reference to an e-mail he had received from a Procter & Gamble Co. executive suggesting that between 30% and 80% of purchase decisions are made in-store.

" Wunderman, Ogilvy One and 141 Worldwide have a different emphasis, but we'll have three of the strongest worldwide organizations." WPP will also house two branding business, Fitch and Landor.

Matter of Cordiant's debt
The sale of Cordiant PR firm Financial Dynamics to its management is continuing to be held up by Cerberus Capital Management, a U.S. hedge fund. Cerberus retains $132 million of Cordiant's $429 million debt and has played a significant role in Cordiant's sale talks. Cerberus is still negotiating with WPP over that debt. An executive close to talks said Cerberus is eyeing Financial Dynamics, though executives close to Financial Dynamics claimed they are days away from closing their deal.

According to WPP's proposal, released to the press today, WPP has offered shareholders $17 million and debt holders a total of $429 million. WPP has also identified restructuring costs related to account losses of $12 million, further reorganization costs of $52 million and transaction costs of $27 million.

Job cuts
When asked by Adage.com about the size of potential job cuts, Mr. Sorrell said, "We are looking at it carefully, particularly those at the head office," adding that WPP wants to "retain the right people."

One Cordiant executive, who did not wish to be named, said that anyone who wasn't directly attached to a client was likely to be cut.

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