Trading slow for Cordiant and Saatchi

Shares in the newly demerged Cordiant Communications Group and Saatchi & Saatchi received a cool welcome on the Stock Exchange on Monday, with prices barely moving in a slow start to trading.

Shares in the newly demerged Cordiant Communications Group and

Saatchi & Saatchi received a cool welcome on the Stock Exchange on

Monday, with prices barely moving in a slow start to trading.



However, this lacklustre debut as separate stocks came as no surprise to

City analysts who said that, even though buyers were likely to appear on

the horizon in the long term for CCG’s Bates Worldwide network, stocks

normally settle quietly on the Stock Exchange before predators make a

move.



For every two shares in the former Cordiant group, shareholders received

one in Saatchi & Saatchi and one in the CCG (mainly Bates and Scholz &

Friends). Cordiant closed at 110p on Friday and the new stocks did not

stray far from this level through the early part of the week.



By Wednesday, CCG had slipped to 105.5p, while Saatchis had risen to

111.5p.



Paul Richards, an analyst at Panmure Gordon, attributed Saatchis’ price

premium over CCG to the fact that it is a better known advertising

network than Bates. Most analysts had expected Bates to drift higher

than Saatchis because it is a more likely takeover target and has pounds

46 million in cash on its balance sheet.



’Saatchis seems more desirable because it’s a more robust network, with

an enduring culture and an attractive client list,’ he said, adding that

this could change if a buyer stepped in for Bates.



Interpublic, Grey Advertising and WPP have all been rumoured as being

interested in buying the Bates net-work (Campaign, 3 October).



However, Michael Bungey, the chairman of Bates Worldwide, has been

talking tough over the past few months, vowing that the company isn’t

for sale.



’The only safeguard against a possible takeover is a good

performance.



We’ve set ourselves tough targets, but we think we can do it,’ he said

in October.



Meanwhile, a powerful incentive package now in place for top Saatchis

management, headed by Bob Seelert, the executive director of the

demerged Saatchis group, has kept investors confident that the network

would remain on its toes in coming months.



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