Cordiant plans sale of Scholz & Friends to fix cash problem

Scholz & Friends, the Germany-based network, is set to be cut loose by its Cordiant parent as the beleaguered group attempts to resolve its cash problems.

Scholz could be sold either to its management or to Sir Martin Sorrell's WPP, which has already expressed an interest in acquiring it.

The move is seen as part of an initiative by David Hearn, Cordiant's newly appointed chief executive, to dispose of several subsidiary operations and concentrate on four core businesses.

They are Bates Worldwide, 141, the group's integrated specialist, Healthworld, its healthcare network, and Fitch, its design arm. This was expected to be confirmed in an announcement to the Stock Exchange this week.

The disposals are intended to put the group back on an even keel after it over-stretched itself with an acquisition spree masterminded by the former chief executive, Michael Bungey, in the 90s.

"Bungey's strategy was well-intentioned, but didn't work," one Cordiant source said. "We want to remain a global communications company and we think that we have a better chance of being that by concentrating on four core operations."

This week, Cordiant was remaining guarded about its intentions. "The company is not going to comment on speculation and rumour," a spokesman said.

However, the group has already confirmed that it is in talks about selling its stake in George Patterson Bates, the second-largest agency in Australia.

However, the agency will remain a part of the Bates network.

At the same time, Financial Dynamics, Cordiant's financial PR business, is expected to be hived off in a management buyout.

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