|
Also unclear is the fate of Zenith Media, the Rs 3.5 billion media
buying arm of advertising agencies Bates India and Saatchi &
Saatchi in India. Another twist relates to the fact that the Indian
arms of Zenith Media and Optimedia, the media buying arm of Publicis,
were expected to merge in India by the first quarter of 2002. There
were indications that Indian arms of Zenith Media, Starcom and Mediavest
were supposed to merge under single umbrella some time back.
The merger will take place on the lines of the international merger
that took place in October 2001 between Publicis Groupe SA and Cordiant
Communications Group (CCG) PLC. The two combined their media buying
operations into one company, the Zenith Optimedia Group. With 166
offices in 59 countries, Zenith Optimedia ranks as one of the top
five media spenders worldwide. About 75 per cent of the company
is owned by the Publicis Groupe and 25 per cent by CCG plc. Now,
the 25 per cent stake will move on to WPP.
On 19 June, the UK-based WPP beat French group Publicis in the
bid for troubled British agency Cordiant. After a protracted tussle
advertising, WPP will buy out struggling UK ad agency Cordiant.
Reports indicate that the deal values Cordiant's shares at £10m
($16.8m). WPP will also be taking on up to £256m of the firm's debt.
The sale of Cordiant PR firm Financial Dynamics to its management
is continuing to be held up by Cerberus Capital Management, a US
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.
WPP will offer one new WPP share for every 205 Cordiant shares.
The report states that WPP's bid still requires the approval of
75 per cent of Cordiant shareholders and Active Value owns 17 per
cent of the firm's equity.
WPP's group chief executive Martin Sorrell said: "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."
Cordiant CEO David Hearn said: "The directors of Cordiant believe
that Cordiant will have a sound future under the ownership of WPP.
In the light of current circumstances, Cordiant believes that this
proposal provides the best outcome that is capable of being achieved
for shareholders."
Also read:
Cordiant shares
suspended on LSE as bidding intensifies
|
