Sir Martin Sorrell: Deal offers stability to Cordiant clients

The deal values Cordiant's shares at �10m ($16.8m), but WPP will also be taking on up to �256m of the firm's debt.

The French group Publicis had also been interested in Cordiant, but on Tuesday it dropped out of the battle saying it did not want to get dragged into a bidding war.

Cordiant's finances have been hit by the sharp downturn in advertising spending by major firms as the global economy has slowed

It has also suffered the loss of major clients. Last year in the US it lost Hyundai and Wendy's, and earlier this year its share price plummeted by nearly two-thirds when it lost the account for Allied Domecq.

Its remaining clients include British American Tobacco and Pfizer.

'Stability and opportunity'

"In the light of current circumstances, Cordiant believes that this proposal provides the best outcome that is capable of being achieved for shareholders," said Cordiant chief executive David Hearn.

Under the terms of the deal, WPP will offer one new WPP share for every 205 Cordiant shares.

"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 group chief executive Sir Martin Sorrell.

"Given that our approach has been widely welcomed by Cordiant's clients, we also believe that a merger with WPP promises both stability and opportunity to Cordiant's clients and people."

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

Rival plans

WPP's bid appears to end a long running saga over the future of Cordiant which saw several interested parties vying for some or all of the stricken group.

Earlier this week it looked as though WPP was going to lose out to a rival plan which would have split Cordiant up.

French media group Publicis had teamed up with US hedge fund Cerberus Capital Management - which owns a large chunk of Cordiant's debt - and was reportedly attempting to push Cordiant into administration.

The plan then was to divide up Cordiant's assets between the two firms.

Meanwhile, it was reported that Cordiant's largest shareholder, Active Value, was against both the administration plan and WPP's takeover bid.

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

WPP's bid still requires the approval of 75% of Cordiant shareholders and Active Value owns 17% of the firm's equity.