The financially troubled Cordiant group this week acted to dampen
down reports that it is ready to put one or both of its global agency
networks up for sale.
Its denial came as the industry was awash with speculation that a
proposal to demerge Saatchi and Saatchi and Bates Worldwide could
coincide with the release of the group’s latest financial results next
month.
WPP’s chief executive, Martin Sorrell, is being mooted as a possible
buyer for Bates, which is particularly strong in the Asia-Pacific
region.
The move would add to an agency empire that already includes J. Walter
Thompson and Ogilvy and Mather.
The speculation has been sparked by what is said to be the mounting
concern of Cordiant’s non-executive directors, Sir Peter Walters and
Professor Ted Levitt, over the group’s continued poor financial
performance and the failure of Bob Seelert, the Cordiant chief
executive, to get to grips with the situation.
Still struggling with the catastrophic loss of more than pounds 270
million worth of Mars business two years ago, and unable to achieve
significant improvements in revenues or margins, Cordiant chiefs have
been under fire from their own managers who accuse them of being removed
from the real world and lacking a ’street fighting’ attitude.
One option would be to boost shareholder value by selling one of the
networks at a price greater than its market capitalisation. That could
mean disposing of Bates and keeping the Saatchi network, resulting in
the elimination of group overheads, including the positions of Seelert,
Charlie Scott, Cordiant’s chairman, and Wendy Smyth, the financial
director.
But Cordiant sources discounted any suggestions of a break-up. They
rubbished reports that S. G. Warburg, its merchant bank, suggested to
the board last month that the group should be split in two. The
directors were said to have rejected the idea as too expensive.
The group claims the rumours have arisen because of the raft of options
- including sell-offs, separate listings for each network and possible
acquisitions - that are considered by the board at the beginning of each
year. But a spokesman insisted: ’We’re not expecting any imminent
developments.’
However, industry sources say the Bates and Saatchis networks might fare
better if they were allowed to split. Neither operation has a big global
client to bind it together, while Bates New York has been hit by a
series of account losses, including the dollars 40 million Miller
Genuine Draft account in December.
A demerger could lead to a diminished role for Zenith Media, the group’s
joint media buying division. Zenith relies on Saatchis and Bates for its
international business and might revert to a purely UK operation.
Insiders say the M&C Saatchi founder could not raise the money and has
no desire to regain control of the company which fired him in late 1994.
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