Cordiant Shareholders Approve ‘Demerger’; Investors Eye Options

As expected, shareholders at Cordiant PLC overwhelmingly approved the holding company’s proposal to “demerge” its operating assets into two new, publicly traded companies: Saatchi & Saatchi PLC and Cordiant Communications Group PLC.
The extraordinary general meeting Oct. 23 in London drew only around 30 small investors. More than 60 percent of Cordiant’s outstanding shares are owned by six institutional shareholders, which had already cast their votes of approval by proxy.
Last week, however, the institutional shareholder Cordiant management could previously always count on for support said it would adopt a more activist and less sympathetic stance toward management at all its holdings. Michael McLintock, 36, the new managing director of London-based M&G Group, which holds a 5.5 percent stake in Cordiant, indicated his company will be overhauling its investment approach on underperforming funds.
“We’ve developed a reputation for falling in love with the management at our investments,” said Tessa Murray, M&G’s communications manager. “Now what we’re saying is we need to make sure we’re getting good return on our investments.”
M&G’s Recovery unit trust, which holds the stake in Cordiant, is one of M&G’s largest funds. Recovery has underperformed the market over the past year, although results have begun to improve over the last three months.
Separately, CCG is widely considered to be a takeover target once its new shares begin trading Dec. 15.