MUMBAI: Will Bates India be working with Rediffusion DY & R or with JWT or with Equus Red Cell? WPP chairman and chief executive Martin Sorrell, was quoted by adage.com as saying that “in Asia, Bates and DY & R work closely together, though there are alternatives to that. Red Cell is in Asia as well.” However, Sorrell was also open about the fact that the Bates brand might exist independently in certain markets. Media reports have already quoted Bates India MD and CEO as saying that Bates could be an independent brand in Asia.
Also unclear is the fate of Zenith Media, the Rs 3.5 billion media buying arm of advertising agencies Bates India and Saatchi & Saatchi in India. Another twist relates to the fact that the Indian arms of Zenith Media and Optimedia, the media buying arm of Publicis, were expected to merge in India by the first quarter of 2002. There were indications that Indian arms of Zenith Media, Starcom and Mediavest were supposed to merge under single umbrella some time back.
The merger will take place on the lines of the international merger that took place in October 2001 between Publicis Groupe SA and Cordiant Communications Group (CCG) PLC. The two combined their media buying operations into one company, the Zenith Optimedia Group. With 166 offices in 59 countries, Zenith Optimedia ranks as one of the top five media spenders worldwide. About 75 per cent of the company is owned by the Publicis Groupe and 25 per cent by CCG plc. Now, the 25 per cent stake will move on to WPP.
On 19 June, the UK-based WPP beat French group Publicis in the bid for troubled British agency Cordiant. After a protracted tussle advertising, WPP will buy out struggling UK ad agency Cordiant. Reports indicate that the deal values Cordiant’s shares at ?10m ($16.8m). WPP will also be taking on up to ?256m of the firm’s debt.
The sale of Cordiant PR firm Financial Dynamics to its management is continuing to be held up by Cerberus Capital Management, a US hedge fund. Cerberus retains $132 million of Cordiant’s $429 million debt and has played a significant role in Cordiant’s sale talks. Cerberus is still negotiating with WPP over that debt. An executive close to talks said Cerberus is eyeing Financial Dynamics, though executives close to Financial Dynamics claimed they are days away from closing their deal.
According to WPP’s proposal, released to the press today, WPP has offered shareholders $17 million and debt holders a total of $429 million. WPP has also identified restructuring costs related to account losses of $12 million, further reorganization costs of $52 million and transaction costs of $27 million.
WPP will offer one new WPP share for every 205 Cordiant shares. The report states that WPP’s bid still requires the approval of 75 per cent of Cordiant shareholders and Active Value owns 17 per cent of the firm’s equity.
WPP’s group chief executive Martin Sorrell said: “The acquisition of Cordiant will make an important contribution to our long-term strategic goals – 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.”
Cordiant CEO David Hearn 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.”