Julian Treger and Bryan Myerson, who run Active Value, increased their stake in Cordiant to 23.94% on Friday -- just short of the 25% it needs to stop WPP. Sir Martin needs 75% of Cordiant's shareholders to back his deal, otherwise the company could go into administration.
According to a report in The Observer, Active Value is now casting around for allies as it seeks to derail WPP's bid, which gives shareholders just 拢10m.
Active Value had previously opposed early efforts by hedge fund Cerberus to force Cordiant into administration, allowing it and Publicis to pick off the assets, but with WPP's deal moving quickly ahead Active Value is running out of options.
Grey Global had earlier been linked to a bid with Cerberus to buy Cordiant although the price was seen as too high for the conservative American advertising group.
However, Active Value are now planning to sound out Grey about forcing Cordiant into administration, breaking it up, and picking off some of the more appealing assets.
Grey, like WPP, is interested in the Healthworld business and the remaining bits of Bates, which it can use to strengthen its own agency network, Grey Advertising.
Like WPP and Cordiant, Grey also shares clients with Cordiant, including British American Tobacco.
Myersen and Treger could seek a wider alliance, taking in Cerberus, the US hedge fund that speaks for 拢80m of Cordiant's debts. Cerberus excluded itself from Sir Martin's deal. However, Sir Martin holds a powerful position as he has taken over Cordiant's bank debt, worth 拢256m, and is by far the biggest creditor.
If a counter offer were made against WPP鈥檚 拢266m bid, it would have to be around 拢300m, according to The Observer.
However, analysts still believe that WPP's bid, favoured by the majority of Cordiant's banks and its board, has a good chance of winning out.
Active Value, which was already Cordiant's biggest shareholder, increased its stake in Cordiant to 23.94% on Friday from 16.7%.
The move has surprised analysts because the shares changed hands at 3p a share, a considerable premium on WPP's offer.
The investment fund had originally proposed to install 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 has already lost 拢30m. It could be facing an even larger loss if its gamble fails, it does not manage to attract allies and Cordiant goes into administration, because it will forgo its share of the 拢10m, which would be forfeit.
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