By Alan Gottesman
Spin Spin Cordiant is trying to put a positive interpretation on its plan to spin off its two main advertising agency networks, Saatchi & Saatchi and Bates, into separate companies. It will ‘energize the operators in the networks and unlock the considerable potential residing in our businesses,’ according to a company statement. Those objectives, of course, are what holding-company managements get paid to do, and have achieved with success in most cases. Not here, although the hopeful rationale is about as candid an admission of failure as we’re likely to see. Cordiant’s creation was a financial artifice with no special business raison d’tre. The breakup is an accountant’s delight, too. Aside from putting Saatchi & Saatchi in one pot and Bates in another, the rest of Cordiant’s operating units appear to have been dealt out with an eye toward balancing revenues and profits between the two ‘DisCordiant’ survivors. At the moment of de-merger, probably to come in December of 1997, holders of Cordiant shares will own stock in two separate entities. After that, the companies will go their individual ways. Don’t be surprised to see one, or maybe both, snapped up by one of the successful holding companies within 24 months.
–Alan Gottesman (firstname.lastname@example.org) is principal of West End Consulting.
THE GOTTESMAN FILE
The two ‘DisCordiant’ survivors will be rough equals in size, although the Bates unit has 18 percent more people but only 4 percent more profit.
…..Revenue…………$ 590…..$ 615
…..Trading profit…..$ 38.5…..$ 40.0
Source: Company records. Revenue and profit in millions of dollars. Revenue/employee in dollars.
Copyright ASM Communications, Inc. (1997) ALL RIGHTS RESERVED
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