Speculation about an imminent bid for the Bates network soared
along with its parent company’s share price this week as Michael Bungey,
the Bates chief executive, appeared to modify his hard-line stance of
opposing any deal.
The shift in Bungey’s rhetoric came as Cordiant, the Bates holding
company, attempted to snuff out speculation that it was about to be
taken over by True North, the Chicago-based owner of FCB and Bozell. But
Cordiant’s Stock Exchange announcement on Monday - claiming that
although there had been ’indications of interest’ from other groups no
discussions had taken place - failed to dampen the belief that the group
is ’in play’.
’Cordiant has said it’s not for sale but clearly the markets don’t
believe it,’ a source close to Cordiant said. ’Maybe there’s no smoke
without fire and the group is a very attractive business.’
Bungey, who has consistently declared his opposition to the sale of
Bates since its demerger from Saatchi & Saatchi at the end of 1997, this
week would not confirm or deny that he had spoken to True North.
But he added: ’Any discussions we have with anybody will be on our own
terms and for the sole reason of accelerating our growth. I’m always
willing to listen to people.’
Industry sources in the US claim Bates and True North have already
exchanged financial statements and that a bid could be discussed at a
True North board meeting on Monday.
Takeover speculation is being fuelled by growing scepticism that Bates
will deliver the performance it promised at the time of its demerger and
that its growth will be perpetually inhibited by a lack of
internationally aligned business. Since the loss of pounds 270 million
worth of global Mars business in 1995, British American Tobacco has been
the only ’glue’ holding the network together.
Bates could be attractive to True North because of the European network
that would come with such a sale. FCB is having to rebuild from scratch
in Europe after the collapse of its alliance with Publicis.
Other suitors could include Grey, but Ed Meyer, its chairman, is thought
to be reluctant to become involved in a competitive bid or do anything
to upset BAT, whose global business it shares with Bates.
Martin Sorrell’s WPP has already run the rule over Bates. ’We’ll see how
things develop,’ a WPP source said. ’But I’m sure we could help Bates