So, what do I know? In the course of speculating idly last week
about the future of Media Planning Group I inadvertently forgot that
ownership of Zenith Optimedia Group is no longer split equally between
Publicis and Cordiant, but 75:25 in favour of the French.
Let's hope for better luck this week as I speculate on the future of
Cordiant's 25 per cent stake in the charming acronym that is ZOG. The
trigger was a headline in last Sunday's Observer - "Cordiant in crisis
talks with banks" - which detailed the tale of yet another agency going
shopping at the top of the boom only to find it has paid top dollar for
everyone else's leftovers.
One of the things banks do when over-extended borrowers hit tough times
is make them sell off prime assets. A 25 per cent stake in the world's
fourth-largest media buyer has the lustre of a crown jewel, certainly
when you consider that its share of ZOG's profits may be one of the few
bits of Cordiant's accounts that makes for cheery reading.
So does that mean 25 per cent of ZOG would fetch Cordiant a pretty price
on the open market? Well, no. No-one in their right mind would buy 25
per cent of something if a rival owns 75 per cent. Which makes Publicis
the most likely buyer.
But is that realistic too? If buying out Cordiant was the only option on
the table, then I suspect Publicis would pass on the deal: with 75 per
cent it has the management control it needs. If, however, Publicis were
to acquire Cordiant as a whole, then that might be different.
All of which leaves the third option that someone else will acquire the
ZOG stake as part of purchase of Cordiant. Under the terms of the
original deal between Publicis and Cordiant, however, that would
immediately trigger Publicis' option to buy the Cordiant stake in ZOG at
a minimum price of £75 million.
A fourth possibility is that Cordiant's prospects worsen significantly
still, and the banks or institutional shareholders engineer a break-up
on the basis that the component parts of the group are worth more than
You'd think that, weighed down by a shareholder such as Cordiant, senior
ZOG executives, at least those in the Zenith part, would be agitating
for change. Such instability, you'd reason, can't be good for ZOG. The
remarkable thing in talking to them is how sanguine they are. Their
reasoning is simple: with so few shared clients, and less than 5 per
cent of their revenues coming from Cordiant, it's an almost total
irrelevance to them.
Truth is, there's only one place the Cordiant stake in ZOG is going to,
and that's Publicis. The only doubt is when. Meanwhile, the Zenith staff
will have to soldier on with a shareholder holed below the
Still, for those of them who've been around a while, it's just the way
it used to be.
Claire Beale is on maternity leave.