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
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
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
’The only safeguard against a possible takeover is a good
We’ve set ourselves tough targets, but we think we can do it,’ he said
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.