Cordiant may opt for Zenith poison pill

Cordiant, the advertising group which announced a three-way split of its operations on Monday, has admitted it might place pre-emption rights over shares in its Zenith Media Worldwide subsidiary.

Bob Seelert, Cordiant's chief executive, said no decision had been taken about pre-emption rights which could be used as a "poison pill" defence against predators.

Cordiant's position on the issue would be outlined in the demerger prospectus which would be launched ahead of a special shareholder meeting in October, said Mr Seelert.

The company is looking for a partner for Zenith. However, if no partner is found then, under current proposals, Zenith will be owned equally by Cordiant's other two businesses that are being demerged - the Saatchi & Saatchi advertising agency and the Bates marketing group.

Zenith has offices in 22 countries but is considered too small to compete in the media buying sector, a business that entails an agency buying advertising space for clients.

Regardless of any poison pill, some industry experts question how attractive Zenith would be to a buyer. One said: "Zenith is interesting because of the accounts it holds. But what would stop those accounts moving back to its former parent company in the event of a takeover?"

The Cordiant demerger, which could formally take effect in December with the stock listing of Saatchi & Saatchi and Bates in both London and New York, has put all three groupings into play as potential takeover targets.

One rival media services group said it would certainly take a look at the individual businesses. A senior executive said: "Everyone in the industry will be putting the [acquisition] slide rule over all these new companies."

Lorna Tilbian, media analyst with Panmure Gordon, said: "Both [Saatchi and Bates] could go in takeovers. It seems likely that a partner will be brought in to Zenith so it can be floated off."

But speculation about Saatchi & Saatchi and Bates as takeover targets was brushed aside by Mr Seelert. He said: "Frankly we do not see it that way. Both are robust companies that are perfectly capable of standing on their own."

Young & Rubicam, one of the US advertising groups linked by analysts as a possible future partner for Zenith, ruled itself out of the running yesterday.