Rebel shareholders try to force Sorrell's hand over Cordiant

Rebel shareholders this week boosted their stake in Cordiant beyond 25 per cent in what is seen as a massive gamble to force Sir Martin Sorrell's WPP to increase its £266 million offer for the embattled group.

Active Value now holds 25.13 per cent of Cordiant, meaning that WPP would be unable to complete a deal without its agreement.

The move is seen as highly risky. Analysts say that, if Active Value votes against WPP's bid, the banks would probably seek to put Cordiant into administration, causing all shareholders to lose out. Shares can only be traded until 7 July.

WPP, which holds most of Cordiant's bank debt worth £256 million, has offered investors only £10 million. But it has warned it will put the group into administration if its bid is derailed.

Bob Willott, the editor of the industry newsletter Marketing Services Financial Intelligence, said he would be surprised if the banks agreed to any Active Value alternative plan.

"Its proposed management team isn't really proven to deal with this type of crisis and it will need a lot of new money, more than the Active Value proposal has so far envisaged," he said. "Meanwhile, clients and staff will become more insecure at Cordiant."

Cordiant chiefs have had discussions with their major clients, including British American Tobacco, Pfizer, Seat and Roche, who are said to support the WPP deal.

Industry sources say that, once WPP completes the takeover, about 80 per cent of the business currently held by the Cordiant-owned Bates network in Europe will be moved into WPP's Red Cell operation.