Cordiant Communications Group, which continues to look for an agency-holding-company buyer, ran into opposition last week from one of its largest investors.
Active Value Fund, which has called for an extraordinary general meeting, wants to unseat current management and is prepared to put up half of a proposed $50 million equity injection. Sources said the vocal London-based fund, a 14.1 percent shareholder, is gaining support from other institutional investors, including Artemis Investments and Morley Investment Managers, as well as several small retail investors.
The shareholders have seen CCG's market capitalization diminish from $2.3 billion at its height two and a half years ago to $41 million today. They fear a sale would leave them empty-handed and fatten the pockets of CEO David Hearn and finance director Andy Boland [See related story, page 24].
Active Value is proposing Richard Wheatley, former chairman and CEO of Leo Burnett in London, to run CCG. "The shareholders are more confident than the current management," Wheatley said. "I would like to build the business on the confidence of the shareholders in the people and the clients."
Last week WestLB in London downgraded CCG's share value to zero pence. Given CCG's precarious financial situation, sources said bidders could get it for its gross debt—estimated at $400 million—or less.
Publicis Groupe, WPP Group, and Cerberus Capital Management working with Grey Global Group have been carrying out due diligence. It could not be determined if any have made a bid. Publicis and Cerberus did not return calls; WPP declined comment, as did Grey.
Lenders have pledged support until July 15. An extraordinary meeting could still be held after that date.