French foiled in Cordiant fight
ADVERTISING boss Maurice Levy has been thwarted in his attempt to buy assets on the cheap from the troubled Cordiant group.
The chief executive of French advertising group Publicis is likely to face a bill of £85m for 25% of ZenithOptimedia, Cordiant's media-buying arm, and related assets. This is despite an earlier agreement on a much lower price for ZenithOptimedia.
Publicis owns 75% of ZenithOptimedia and is contractually obliged to buy the minority stake for £75m. On top of that, Levy is facing a further £10m bill for other assets with the Zenith name attached.
Cordiant has been at the centre of an extraordinarily complicated takeover battle.
Sir Martin Sorrell's WPP group, which has made an agreed £266m debt-and-equity offer for Cordiant, is favoured to win control when it puts its proposal to shareholders on Wednesday.
Levy held talks with both Sorrell and David Hearn, chief executive of Cordiant, in an effort to reduce the £85m price tag.
Even before WPP launched its offer for Cordiant, Levy approached Sorrell with a suggestion that he could buy the minority stake in ZenithOptimedia for only £63.75m as well as the £10m for other parts of the business that he wanted.
The lower price tag had previously been agreed by Hearn who had asked Levy to buy out Zenith-Optimedia earlier than the original deadline of January next year. A deal was struck with Sorrell on the understanding that Publicis did not enter the bidding battle for Cordiant.
But when Publicis subsequently made an offer, in a proposal backed by US investment fund Cerberus, Sorrell is believed to have made it clear that his agreement with Levy would no longer stand if WPP's bid succeeded.
Levy has claimed that he was 'double-crossed' by Cordiant's board, which he has said was on the point of accepting the Publicis offer but suddenly chose WPP instead.
It is believed that Levy threatened WPP with legal action last week as a result of the dispute over ZenithOptimedia. WPP's offer will be voted on by Cordiant shareholders this week and could still be blocked by Active Value, the fund that owns 28% of Cordiant and has attempted to find an alternative to WPP's bid.
