Cordiant Communications Group is mulling purchase offers after reeling from the loss of its global client Allied Domecq, whose contract ends in October. The company lost another third of its value yesterday after it revealed that potential suitors were making bids below the current share price, according to news reports.
The company, which is also considering a bankruptcy reorganization, has suffered a string of U.S. and U.K losses (April 29 Xtra) and has lost more than 90% of its stock value over the past year.
Observers speculate that Publicis, WPP Group and Havas are potential suitors.
In a statement, Cordiant said it is evaluating offers, but “none of the proposals currently under consideration is likely to result in an offer at the current share price.” It is also still considering reorganization.
Cordiant’s share price was GBP 5.99 at closing on May 12, down from a year’s high of GBP 36.00.
Observers said suitors are more likely to want pieces of Cordiant, including promotion network 141 Worldwide. But some insiders speculate that Cordiant’s current management prefers to sell as a whole. Publicis is thought to be the most likely suitor, given its joint ownership with Cordiant of media-buying firm Zenith Optimedia. However, Publicis works with Philip Morris, which would conflict with Cordiant’s remaining global client, British American Tobacco (BAT). Publicis, WPP and Havas could not be reached for comment.
“We’re looking at all options,” said Jay Farrell, regional director of 141 Americas. “We care about two things: Our people and our clients, and we’ll do what’s right by them.”
Most 141 offices worldwide have a healthy slate of local clients who aren’t concerned about global reach. That makes some 141 offices decent candidates for local-management buyouts. In the U.S., 141’s New York City office is hardest hit by the loss of AD.
Last week, Allied Domecq tapped Publicis to handle its approximately $370 million marketing business beginning in October. 141 sister ad agency Bates handles an estimated $30 million in AD advertising and 141 Worldwide has about $340 million in promotions and advertising work.
Meanwhile, Cordiant is at risk of losing staffers to its clients, Publicis and other shops picking up Cordiant business. AD managers have been happy with work from 141 and want to keep individuals on that business, sources said. However, there’s no word of staffers jumping ship yet.
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