Cordiant shares tumble as bidders seek bargain price
LONDON - Shares in Cordiant Communications tumbled by 20% yesterday and were still falling this morning after the group said it was considering an offer to buy the company that would value it below its current share price.
Shares in the troubled advertising group, headed by chief executive David Hearn, closed yesterday at 6p, a drop of 20% on the previous day's close, after the company said that it was talking to potential bidders about a sale, but warned "none of the proposals currently under consideration is likely to result in an offer at or near the current share price". Shares in the company were trading as low as 4.6p on May 22.
This morning, shares in Cordiant fell to 5.75p, a further fall of 4.17% or 0.25p.
Cordiant has been on the verge of breaking up since it lost several major clients, most recently with Allied Domecq confirming it was moving its advertising business out of Bates Worldwide. A sale of the company as a whole has been widely ruled out, with industry commentators noting that it would be cheaper for rival advertising business to go in and steal clients and key staff, rather than pay for an under-performing business.
A disposal programme designed to help pay off some of Cordiant's £249m debt is now under way, with the company announcing yesterday that it had sold 70% of its stake in its Australian advertising business, including agency George Patterson Bates, for £24.6m cash.
It is also on the verge of selling its public relations agency Financial Dynamics to its management for a sum tipped to be between £25m and £30m. A third business, the Germany-based Scholz & Friends ad agency, is also up for sale.
On top of its loss of the Allied Domecq account, Bates has seen Woolworths and the Post Office both shift work to other agencies. The latest advertiser said to be reviewing its arrangements with Cordiant is the DIY chain B&Q.
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