Cordiant’s agency networks are bracing themselves for a
restructuring by the group, possibly involving a demerger of Bates
Worldwide.
Cordiant maintained an almost total silence after its board met on
Tuesday amid mounting speculation of imminent action.
’Something is up and it will become clear in the next few days,’ a
senior manager at a Cordiant group agency said. ’At the moment we’re
being told nothing and that’s very unusual because Cordiant has always
been a leaky bucket.’
Industry sources say the group will not be able to defer an announcement
on how it plans to boost its underperforming share price much longer
before the Stock Exchange forces its hand.
Charlie Scott, Cordiant’s chairman, and Bob Seelert, its chief
executive, are believed to be planning to build on the group’s return to
profitability (±±¾©Èü³µpk10, 21 March) by exploring ways of unlocking value
for shareholders.
One possibility is that Cordiant may try to link Bates with Bozell and
take a majority stake in the enlarged network. But the idea was
dismissed by Chuck Peebler, Bozell Worldwide’s chairman. ’There’s bound
to be further consolidation in the industry,’ he said. ’But we’re not
doing a deal with Bates.’
A more likely outcome is that Bates will be spun off with Cordiant
retaining a minority stake. That course could leave Bates vulnerable to
a takeover bid by a rival group, such as Martin Sorrell’s WPP, but would
remove the competitive tensions between Bates and its Saatchi and
Saatchi sister network.
Bates managers have felt a deep sense of injustice that the Procter and
Gamble business, handled by Saatchis, prevents it pitching for other
household goods business.
’If P&G insists on treating the two networks as one, we should be given
P&G business,’ a Bates source said. ’If not, we should be allowed to go
after rival accounts.’
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