WPP's Cordiant bid to prevail despite shareholder dramas

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The cast of the Cordiant Communications drama includes a billionaire chess patron who is snapping up shares, a potential predator lurking in the shadows and an opposition shareholder group with an unknown endgame. Still, the holding company will likely end up in the hands of Martin Sorrell, after Cordiant's July 23 shareholders' meeting.

But the WPP Group chief executive may have to put Cordiant into administration first. Active Value, the opposition shareholder group that has 28.75% of the shares-the biggest holding-is widely expected to scuttle the 75% approval needed by voting against WPP's $17.5 million offer for the shares.

"I think WPP will buy it, and sell [Cordiant's 25% stake in] Zenith to Publicis," said one London analyst.

To preserve the value of that stake, WPP insisted that Cordiant's shares be delisted on July 16 from the London Stock Exchange. Otherwise, a change in control at Cordiant would invoke a clause that revalues Cordiant's 25% stake in ZenithOptimedia Group, now set at $120 million, to 25% of Cordiant's market value, or about $5 million. Publicis Groupe owns the remaining 75% of Zenith.

Conspiracy theories surround Cordiant because, except for Mr. Sorrell, no one else's agenda is clear. Syrian-born Parisian socialite Nahed Ojjeh, a chess patron and widow of a Saudi arms dealer, secretly built up a 9.89% stake in Cordiant, often paying well above the price WPP is offering shareholders. Publicis Groupe Chairman-CEO Maurice Levy denied that Ms. Ojjeh has any connection with him or Publicis, beyond owning "under 1%" of Publicis stock and moving in the same circles in Paris.

Publicis role

Publicis has been considered a potential player since making an offer for Cordiant in June and because a change in Cordiant ownership before the July 16 delisting would slash the price of Cordiant's Zenith stake.

"I recommended we stop, and we did stop [after WPP's counterbid]," Mr. Levy said. "We've been approached by Active Value and have heard their proposal and I personally decided not to participate in any agreement."

Active Value wants Cordiant kept intact under new management, and is holding its own meeting July 23 to try to elect new board members.

"There is an assumption that there is method in the madness of Active Value and Madame Ojjeh, but nobody can work out what that method is," said one analyst.

If Cordiant does go into administration, it could be a pre-packaged administration, under which WPP, as the main creditor since Mr. Sorrell bought Cordiant's $430 million debt, almost immediately buys Cordiant back. It would be almost impossible for anyone else to pick up the company's assets during administration, because they would first have to pay off the Cordiant debt held by WPP.

Last week, Colin Hearn, CEO of Cordiant's integrated marketing services agency, 141 Worldwide, confirmed he is leaving. Mr. Hearn is expected to join Publicis.

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