WPP acquired a further 拢90m of debt in Cordiant from Cerberus Capital Management, which was earlier linked to bids by Publicis and Grey Global, adding to the 拢256m of debt WPP bought last week from Cordiant's banks.
WPP's buying up of the 拢90m of debt controlled by Cerberus came as Active Value further increased its stake in Cordiant yesterday, raising it to 25.73% -- more than the 25% it needs to block WPP's bid, leaving analysts to question what its next move might be.
The London Stock Exchange revealed in a disclosure issued at midday that Active Value had increased its stake to 26.21%. Yesterday, the LSE said that the fund manager Active Value had increased its stake to 25.73%.
The acquisition of more Cordiant stock follows a letter sent by Cordiant yesterday to shareholders detailing proposed resolutions made by Active Value and recommended shareholders not to support them ahead of an emergency shareholders meeting on July 23.
The resolutions related to Active Value's original plan, which it is apparently still standing by, to remove Cordiant chairman Nigel Stapleton, chief executive officer David Hearn, and the finance director Andrew Boland.
Active Value proposed installing Richard Wheatly, the former Leo Burnett and Jazz FM chief, as chairman and Stephen Davidson as finance director.
The Cordiant letter also said that Active Value was calling for Wheatly and Davidson to be allowed to appoint "a person it didn't identify as the new CEO of Cordiant".
Cordiant said it had been informed that this person was "a senior executive in one of the world's biggest advertising and communications groups, with experience in the restructuring and turnaround of international advertising networks".
It has since been revealed that this unidentified person could be the recently ousted regional director of McCann-Erickson WorldGroup, Ben Langdon, who has been revealed to be involved in talks with Active Value and was possibly being lined up as a chief executive to work with Wheatly.
However, how these resolutions now stand with WPP in control of all of Cordiant's debt is unclear.
Active Value has lost the support of German investment bank WestLB, which was the architect of its deal to install Wheatly and recapitalise Cordiant.
But if Active Value blocks WPP, Cordiant will go into administration where, with Sir Martin Sorrell's WPP in control of the debt, the ad giant will be able to buy the assets.
Analysts now believe that Active Value's best option is to use its stake as a bluff to force WPP to increase its 2.4p offer, which gives shareholders just 拢10m.
Simon Lapthorne, media analyst at Old Mutual Securities, said: "It could be an elaborate bluff. On the face of it, it's good money after bad. It could use it as a bargaining chip to counter WPP, taking the view that WPP does not want to put Cordiant into administration, which would be expensive and messy.
"It might be enough to persuade WPP to offer more than the 2.4p it has already offered, but whether it would be enough to make all this worthwhile is another matter."
Cordiant also revealed yesterday in its annual report that former CEO Michael Bungey was paid 拢749,608 when he stood down as chief executive. In addition, Bungey is to be paid fees of 拢100,000 for consultancy work.
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