Prior to WPP's bid for Cordiant on Monday, Active Value was Cordiant's biggest shareholder with a 16.7% stake in the crises-hit advertising firm. It now holds 99,888,099 shares, or 23.94%, after its buying spree.
However, a 10% stake in Cordiant changed hands yesterday after WPP and Cordiant published the details of the acquisition, which revealed that shareholders were to get just 2.4p a share, valuing Cordiant at just 拢10m.
Active Value was reported to be very unhappy with the deal on the table and it was after this that 10% of Cordiant's shares changed hands. It is now apparent that Active Value yesterday added 7.2% more Cordiant shares to its holding. It is not clear where the other 2.8% of shares went.
The move has surprised analysts because the shares changed hands at 3p a share, a considerable premium on the WPP offer.
Active Value was offering no comment after it emerged as the buyer of the bulk of the 10% of Cordiant shares that traded hands yesterday and said it would probably not be offering any kind of comment today.
By dramatically increasing its stake, Active Value now has one of two options: it can now try to force WPP to increase its offer price or push ahead with its original plan of keeping Cordiant independent.
The investment fund has proposed Richard Wheatly, former head of Jazz FM and Leo Burnett, as chairman to lead a new management team replacing chief executive David Hearn.
Cordiant has already expressed its view most clearly -- it says it is too weak to remain an independent force in the business and wants to be acquired by WPP.
Active Value is playing a risky game. WPP needs the support of 75% of shareholders. If it fails at the last minute, Cordiant will go into administration and shareholders will get nothing.
WPP, however, will still win as it has an agreement with Cordiant's lenders to buy its assets if it goes into administration.
Active Value has already lost 拢30m. It could be facing an even larger loss if its gamble fails.
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