Bates ’in play’ as US buyers circle

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.

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

out.’



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