The drop of 14.29%, or 2p, this morning followed an update to investors in which Cordiant said it was looking at several proposals but that an offer was unlikely. Cordiant's shares plunged 67% two weeks ago after it lost its Allied Domecq drinks account.
One of the bids it is looking at is known to be from French advertising giant Publicis. There is a fear that if this falls through, Cordiant Communications could be seized by its banks.
This morning, Cordiant, headed by chief executive David Hearn, said it had been actively evaluating a range of more detailed proposals, including possible offers for the company or involving its recapitalisation.
Publicis has been confirmed as one of two groups that have expressed an interest in Cordiant since its share price collapsed. The second bidder is thought to be an as-yet unnamed venture capitalist group. However, if these deals fall through, Cordiant, which has debts of more than 拢200m, could lose control of its future to its banks in a debt-for-equity swap.
This would involve banks, including HSBC, swapping debt for shares in the company. The deal would be similar to the one banks imposed on Sir Martin Sorrell in the early 1990s when WPP Group became overstreteched.
In its statement this morning, Cordiant said: "Throughout these developments, Cordiant has continued to work closely with its lenders. Cordiant's board is encouraged by both the support of its lenders and the constructive discussions that continue concerning the short-term and long-term funding of the group.
"In the meantime, the non-core disposal programme already announced continues to make good progress and, in the case of certain of the company's assets, has reached an advanced stage."
It has also emerged that US hedge fund Cerberus Capital Management will hold considerable sway over Cordiant's future.
The firm has been building up a bid stake in Cordiant's debt pile and it is thought to hold between 25% and 50% of the debt.
If a debt-for-equity move was put into motion, Cerberus, named after three-headed dog that guards the entrance to Hades, along with HSBC would pick up Cordiant shares.
It is understood that talks with Publicis will get under way this week. Publicis is thought to be most interested in acquiring Cordiant's 141 marketing services division and its global health marketing business Healthworld.
It is not the first time the two, which jointly own the media buying group ZenithOpimedia, are reported to have been in takeover talks -- Cordiant, at the end of another bad year in 2001, was reported to be talking with Publicis.
However, Publicis would also acquire Bates, which would reunite it with Saatchi & Saatchi.
Bates Worldwide and Saatchi & Saatchi Advertising were the two networks that were the cornerstone of the Saatchi brothers' empire. The two split when Cordiant plc was broken up in late 1997 to form Cordiant Communications Group (new home to Bates Worldwide and Scholz & Friends) and Saatchi & Saatchi plc.
Saatchi & Saatchi was eventually acquired by Publicis in 2000.
Last week, it was reported that Cordiant's investment bank advisers UBS had sent out packs to interested bidders, and several management buyouts of Cordiant's divisions are being considered, including financial PR firm Financial Dynamics and the profitable design agency Fitch.
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