WPP Won’t Sweeten Its Cordiant Bid

NEW YORK As Cordiant Communica-
tions Group shareholder Active Value continued to increase its stake in the troubled holding company Monday, WPP Group released a statement reiterating its unwillingness to sweeten investor terms as set out in its bid for CCG.

Active Value, the London fund management company that has voiced disapproval of WPP’s bid, bought another 1 million CCG shares and now owns about 27 percent of the company. Active Value needs only 25 percent to vote down the acquisition.

In a statement issued late on Monday, WPP said it “does not intend to revise the terms set out” in its acquisition proposal sent to CCG shareholders June 28. However, WPP said it “reserves the right to revise its terms for the acquisition of Cordiant in the event of a competing situation.”

Under U.K. takeover laws, once a company acquires 30 percent of another concern, it must make an offer for outstanding shares it doesn’t own. Active Value has not signaled its intent, as it has lifted its CCG holding daily over the past week.

The wrangling came against the backdrop of WPP’s annual meeting, at which company investors signaled their displeasure with the length of chief executive Martin Sorrell’s employment contract, with nearly 47 percent of them either voting against WPP’s 2002 remuneration report or abstaining on the vote.

The length of executive contracts has garnered significant scrutiny in the U.K. lately, with corporate best practice codes moving all directors to one-year contracts. (With the exception of Sorrell, WPP is instilling that change in its board.)

The approximately 75-minute meeting at London’s Savoy Hotel on Monday drew none of the fireworks expected. There was no verbal criticism of Sorrell’s total compensation package-estimated to be worth $107.5 million at current WPP share prices-and no questions were asked by investors. Last year, Sorrell earned nearly $2.6 million, which included a $1.2 million bonus of restricted stock, which will vest in two years.

Sorrell told investors at the holding company’s annual shareholders meeting that worldwide revenue in the first five months slipped 3 percent as the pound strengthened against the dollar and the yen. In constant currency terms, revenue rose more than 1 percent.

On a constant currency basis, revenue in North America increased almost 2 percent. WPP said European revenue trends were divergent, with the U.K. seeing a 3 percent drop and Continental Europe reporting a gain of more than 3 percent. Asia Pacific, Latin America, Africa and the Middle East reported a increase of more than 2 percent.

By sector, advertising and media agency revenue climbed over 3 percent; consultancy, up almost 4 percent, public relations and public affairs slid almost 4 percent and branding and identity, healthcare and specialist communications, dropped over 1 percent.

Sorrell acknowledged 2003 “continues to be a difficult year, although better than 2002.” But the CEO, who has been more pessimistic about immediate prospects of an industry turnaround than his U.S. peers, told shareholders he sees some hopeful indications. “There are signs of stabilization in the advertising and marketing services industry, particularly in the United States,” he said. “The prospects for 2004, when the so-called quadrennial factors operate, do give cause for a little more medium-term optimism.”

This story updates an item posted on June 30.