NEW YORK WPP Group has prepared a new bid for Cordiant Communications Group as it races against the pairing of Publicis Groupe and hedge fund company Cerberus Capital Management to put the parent of Bates into bankruptcy, sources said.
The new bid will constitute WPP's third proposal for troubled U.K. holding company CCG.
But Publicis, which intends to divide CCG's assets with Cerberus as part of a pre-packaged bankruptcy deal, may have run into a snag with its plan.
Sources said a CCG client, believed to be handled by Bates, on Monday informed Publicis chief executive Maurice Levy that it intends to pull its business once the company is put into bankruptcy. Representatives from major Bates clients Pfizer and British American Tobacco, which also use some WPP shops for various assignments, declined comment.
One WPP scenario under consideration has J. Walter Thompson absorbing the much of the Pfizer business now at Bates, sources said. Bates' domestic assignments from Pfizer include Sudafed, Benadryl, Rolaids, Zantac, Ben Gay, Cortizone, Neosporin and Visine. It also works on two Pfizer products outside the U.S.: Remegel and Mylanta.
WPP's OgilvyOne would most likely be the beneficiary of Bates' BAT business since the agency recently joined the company's roster, handling Pall Mall, sources said. Publicis's Leo Burnett agency handles BAT's rival Marlboro, Philip Morris's tobacco flagship.
Also on Monday, CCG asked that its shares be suspended in trading on the London Stock Exchange, pending "clarification of the company's financial position," according to a statement from the company.
It was expected that the battle for control of CCG would move to the U.K.'s High Court on Monday, where Publicis would seek the bankruptcy decree. CCG's bankers met to consider the revised proposal from WPP, which offers more favorable terms for the bankers, rather than a higher overall bid, sources said.
The latest round of developments follows a weekend of maneuvers during which Levy sought to get the upper hand in winning control of CCG. After it became apparent he would seek the bankruptcy move Monday, WPP responded with a "materially" improved offer Sunday. The company wouldn't disclose the changes. Originally, WPP had made a bid valued at $428 million, composed of a $411 million for Cordiant bonds and $17 million for the company's equity. Currently, the company is working on an "alternative" offer, which is not expected to be higher in value.
Under its proposed division of CCG assets, Publicis would likely receive the 25 percent stake in Zenith Optimedia, Bates and 141 marketing services. Cerberus, which holds a controlling stake in CCG's senior debt, would take Healthworld.
This story updates an item posted earlier today.