NEW YORK WPP Group on Thursday said it has reached an agreement to purchase troubled rival Cordiant Communica-
tions Group. WPP said it will make a share offering of approximately $170 million to fund the acquisition.
CCG shareholders will receive about 2.4 pence per share; the total cost of the acquisition is 266 million pounds, or approximtaley $445 million, based on the current rate of exchange.
Pending shareholder approval, the transaction could be completed by the end of July. Both companies are based in London.
"The acquisition of Cordiant will make an important contribution to our long-term strategic goals, particularly in marketing services and expansion in Asia," said WPP chairman and CEO Martin Sorrell in a statement.
In the same statement, CCG CEO David Hearn said, "In light of current circumstances, Cordiant believes that this proposal provides the best outcome that is capable of being achieved for shareholders."
WPP said it will buy about $277 million of CCG debt. Hedge fund company Cerberus Capital Management will retain about $132 million of CCG's debt.
Just days earlier, WPP and French rival Publicis Groupe has waged a fierce struggle for CCG. That fight ended on Tuesday, as it became known that WPP had entered into "exclusive and advanced negotiations" with CCG. At that point, Publicis Groupe withdrew from the bidding.
"While we have indicated our interest in acquiring some of CCG's assets, I did not wish to lead Publicis Groupe S.A. into a bidding battle since we consider our last offer both fair and reasonable," Publicis Groupe chairman and CEO Maurice Levy said in a statement. He added that Publicis had been "assured" it will be able to buy out CCG's 25 percent stake in ZenithOptimedia Group.
British American Tobacco, a key client at CCG's 141 marketing services group, had disapproved of Publicis' run at the company, sources said. Publicis' Leo Burnett agency handles BAT competitor Marlboro, flagship tobacco brand of Philip Morris. WPP's OgilvyOne unit was recently added to BAT's roster, taking on the Pall Mall assignment from Bates.
Once the deal is completed, Bates' U.S. operations will be aligned with WPP's J. Walter Thompson, its European operations with Red Cell and its Asian holdings with Young & Rubicam, sources said. The Bates name is expected to disappear.
—with David Gianatasio
This story updates an item posted on June 18.