Cordiant rubbishes Bates and Saatchis demerger rumours

The financially troubled Cordiant group this week acted to dampen down reports that it is ready to put one or both of its global agency networks up for sale.

The financially troubled Cordiant group this week acted to dampen

down reports that it is ready to put one or both of its global agency

networks up for sale.

Its denial came as the industry was awash with speculation that a

proposal to demerge Saatchi and Saatchi and Bates Worldwide could

coincide with the release of the group’s latest financial results next


WPP’s chief executive, Martin Sorrell, is being mooted as a possible

buyer for Bates, which is particularly strong in the Asia-Pacific


The move would add to an agency empire that already includes J. Walter

Thompson and Ogilvy and Mather.

The speculation has been sparked by what is said to be the mounting

concern of Cordiant’s non-executive directors, Sir Peter Walters and

Professor Ted Levitt, over the group’s continued poor financial

performance and the failure of Bob Seelert, the Cordiant chief

executive, to get to grips with the situation.

Still struggling with the catastrophic loss of more than pounds 270

million worth of Mars business two years ago, and unable to achieve

significant improvements in revenues or margins, Cordiant chiefs have

been under fire from their own managers who accuse them of being removed

from the real world and lacking a ’street fighting’ attitude.

One option would be to boost shareholder value by selling one of the

networks at a price greater than its market capitalisation. That could

mean disposing of Bates and keeping the Saatchi network, resulting in

the elimination of group overheads, including the positions of Seelert,

Charlie Scott, Cordiant’s chairman, and Wendy Smyth, the financial


But Cordiant sources discounted any suggestions of a break-up. They

rubbished reports that S. G. Warburg, its merchant bank, suggested to

the board last month that the group should be split in two. The

directors were said to have rejected the idea as too expensive.

The group claims the rumours have arisen because of the raft of options

- including sell-offs, separate listings for each network and possible

acquisitions - that are considered by the board at the beginning of each

year. But a spokesman insisted: ’We’re not expecting any imminent


However, industry sources say the Bates and Saatchis networks might fare

better if they were allowed to split. Neither operation has a big global

client to bind it together, while Bates New York has been hit by a

series of account losses, including the dollars 40 million Miller

Genuine Draft account in December.

A demerger could lead to a diminished role for Zenith Media, the group’s

joint media buying division. Zenith relies on Saatchis and Bates for its

international business and might revert to a purely UK operation.

Insiders say the M&C Saatchi founder could not raise the money and has

no desire to regain control of the company which fired him in late 1994.


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