Issued Statement This Morning

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LONDON (AdAge.com) -- Cordiant Communications Group's banks and board of directors have approved WPP Group's $425 million offer to buy the troubled advertising holding company.

WPP will offer one new share for every 205 Cordiant shares, valuing the share capital of the firm, worth $2 billion three years ago, at just $16.8 million. The rest of the purchase price will be spent on buying up Cordiant's $410 million debt from all but one lender, who will be left with a $126 million debt holding.

WPP's chief executive, Martin Sorrell, said in a statement, "The acquisition of Cordiant will make an important contribution to our long-term strategic goals -- particularly in marketing services and expansion in Asia. Given that our approach has been widely welcomed by Cordiant's clients, we also believe that a merger with WPP promises both stability and opportunity to Cordiant's clients and people."

Subject to market conditions, WPP said it plans to raise $160 million from a new share issue to help fund the takeover.

Cordiant CEO David Hearn, who stands to make $3.3 million as a result of the WPP deal, said in the same statement, "Cordiant will have a sound future under the ownership of WPP. This proposal provides the best outcome for shareholders."

The deal is expected to become effective in early August, after Cordiant shareholders vote on the WPP offer in late July.

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