WPP is to offer new WPP shares in exchange for Cordiant's issued share capital -- the deal values the entire issued share capital of Cordiant at approximately 拢10m and each Cordiant share at around 2.4p, based on the closing mid-market price of 491p a WPP share on June 18 2003, a ratio of 1 WPP share for 205 Cordiant shares.
The deal sees WPP acquire 拢256m of Cordiant's debt at face value from all but one of Cordiant's former lenders. At the same time, WPP plans to raise approximately 拢100m through a placing of new shares.
It follows the announcement on Tuesday evening that the two were entering into exclusive talks after Publicis Groupe chief executive Maurice Levy pulled out of the battle, saying that he did not want to get into a bidding war with WPP.
Sir Martin Sorrell, group chief executive of WPP, said that the acquisition would make important contribution to the advertising holding company, particularly "in marketing services and expansion in Asia".
"Given that our approach has been widely welcomed by Cordiant's clients, we also believe that a merger with WPP promises both stability and opportunity to Cordiant's clients and people," Sir Martin said.
The deal will put WPP close to being the world number one advertising holding company, challenging US rival Omnicom Group as it adds Bates Worldwide, 141 Communications and Healthworld to its business.
The proposal has been unanimously recommended by Cordiant's board of directors and the board of WPP expects the transaction to be earnings enhancing in the first full financial year following completion of the acquisition.
The acquisition still has to go to Cordiant shareholders, who are expected to meet in late July 2003, which will see the deal become effective in early August 2003.
David Hearn, chief executive officer of Cordiant, said: "The directors of Cordiant believe that Cordiant will have a sound future under the ownership of WPP. In the light of current circumstances, Cordiant believes that this proposal provides the best outcome that is capable of being achieved for shareholders."
Cordiant shares, which were suspended on June 16, began trading again this morning from 8am, following confirmation of the proposed acquisition of Cordiant by WPP.
Cordiant will now notify shareholders that it intends to cancel its stock with effect from 8am on July 16 2003.
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