The debt-laden company is at the centre of a three-way battle for control of its assets.

According to weekend press reports, Sir Martin Sorrell's WPP Group has tabled an improved takeover offer of �266m.

WPP's original agreed takeover bid was dramatically blocked last week by French rival Publicis and US hedge fund Cerberus Capital Management, which owns a large chunk of Cordiant's debt.

Takeover blocked

The two companies have reportedly teamed up in an attempt to push Cordiant into administration and split its assets.

Meanwhile, Cordiant's largest shareholder, Active Value, is likely to oppose both the administration plan and WPP's takeover bid, according to press reports.

It wants to sack Cordiant's board and install its own management.

WPP's deal was structured as a scheme of arrangement, which would have seen the company avoid insolvency proceedings.

It would have needed the approval of 75% shareholders.

But Publicis is gambling on Cordiant's debtholders - rather than its shareholders - ultimately holding sway.

According to the Financial Times, the French group will seek a "pre-packaged" administration at the High Court.

Shareholders left out

Such a move would force Cordiant into liquidation, with the two companies making an immediate offer for its assets.

Under the deal, Publicis would buy Cordiant's core advertising business Bates Worldwide and its marketing services business 141, The Wall Street Journal reports.

Cerberus would take over pharmaceutical marketing division Healthworld, design agency Fitch and PR company Financial Dynamics, among other assets.

The deal would leave shareholders in Cordiant - which three years ago had a stock market value of �1.3bn - with nothing.

Third way?

But Active Value found is likely to oppose the liquidation bid - arguing that the group is still solvent.

UK Active claims it has the support of an additional 36% of Cordiant's investors.

This would be enough to block a takeover at an extraordinary meeting.

Ad slump

The WPP deal, which would see Cordiant shareholders receiving a token �10m, has been backed by Cordiant's banks, which are owed �250m.

Cordiant's financial troubles follow a sharp downturn in advertising spending by major corporations since the internet and telecoms boom came to an abrupt end three years ago.

WPP owns a string of advertising, marketing and PR firms worldwide, including Ogilvy & Mather, Hill & Knowlton and Burson-Marsteller.

Publicis, led by chairman Maurice Levy, also owns a string of agencies around the world, including the Saatchi and Saatchi network.