The company was reported last week to be negotiating a sale, said to be worth between 拢36m and 拢43m, with a private equity firm called Pacific Equity Partners. Assets included along with George Patterson are media operation Zenith Media and the creative shop the 北京赛车pk10 Palace.
In a statement, Cordiant said: "Cordiant notes recent press comments, and confirms that it has entered into preliminary discussions regarding the possible sale of a stake in certain of its Australian operations, including George Patterson Bates. Given the preliminary nature of these discussions it is too early to state whether or not this will lead to a transaction."
Pacific Equity Partners has links with Cordiant's new chief executive, David Hearn, who had backed an attempt by the group to undertake a management buyout at Hearn's previous employer, Goodman Fielder. Hearn was chief executive of the company, one of the largest food groups in Australia, but left after the MBO failed.
The deal is expected to see Cordiant retain a minority stake in the Australian operations, with Pacific Equity Partners buying 70% and the remaining 10% being owned by local management.
Cordiant is likely to use the money from the sale to reassure creditors. It has renegotiated banking covenants over recent months, following the collapse of the advertising boom.
The holding company, which owns Bates Worldwide, has been hit worse than most of the other advertising companies by the recession. Over the past 12 months, it has lost work for clients including Hyundai and Wendy's.
This has sparked a change of senior management at the firm, with CEO Michael Bungey taking early retirement in January, to be replaced by Hearn; and chairman Charlie Scott resigning. He has been replaced by former Reed Elsevier co-chairman Nigel Stapleton.
There has been further pressure on its already-depressed share price with the news that Woolworths is reviewing its 拢25m UK advertising account, currently held by Bates.
Last year, George Patterson Bates lost its managing director Hamish McLennan, who moved over to become CEO of Young & Rubicam Australia/New Zealand. He had been at the agency for 17 years and was being groomed for the CEO role.
The agency lost one of its biggest accounts 18 months ago when the Ansett budget airline, which billed A$40m, went under. It also lost FAI insurance, after its parent company HIH collapsed, and Diners Club.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .