Publicis dumps Herbies on Cordiant

Publicis, the French advertising company, has ditched Herbert Smith in favour of Clifford Chance in its battle for Cordiant Communications.

Publicis’ switch has emerged just as Cordiant’s board confirmed that it has recommended a bid from Sir Martin Sorrell’s WPP. Publicis, together with US hedge fund Cerberus, has been trying to push Cordiant into administration.

It is understood that Publicis approached Clifford Chance because the magic circle firm, which has not advised the French advertising group in the past, has greater experience of complex insolvencies and restructurings. Clifford Chance advised Energis on a similar prepackaged administration last summer. Previously, the deal was being handled by Herbert Smith partner Kevin Pullen.

Publicis has teamed up with Cerberus, which is advised jointly by Ashurst Morris Crisp and New York-based fund specialist Schulte Roth & Zabel. The US firm has recently launched an office in London in order to exploit the growing UK hedge funds market there.

Publicis and Cerberus, which has been buying up Cordiant’s senior debt for months, were preparing to put Cordiant into administration so that the two parties could split the company’s assets without shareholder approval – a very rare strategy last used during the Energis administration.

Stephenson Harwood has also popped up in the continued battle for Cordiant Communications. The City firm, which is best known for its shipping practice, is advising Active Value, Cordiant’s largest shareholder.

Active Value, a fund that specialises in investing in under-performing listed companies, may block any takeover offer by WPP because it favours injecting capital into Cordiant by way of a rescue rights issue. The fund, which is being advised by Stephenson Harwood partner Kevin Dean, also wants to replace Cordiant’s management. Active Value holds more than 10 per cent of Cordiant’s shares and has demanded a shareholder meeting, where it will put forward a resolution to axe the company’s board. However, sources close to the parties said that Cordiant has yet to reply and is playing for time.

Active Value is also threatening legal action in the UK and the US for possible breach of fiduciary duty.

Dean claimed that Active Value is pushing for a solution that will benefit the interests of all parties concerned, including shareholders and staff as well as Cordiant’s shareholders. Full details of WPP’s offer were still not available when The Lawyer went to press.

As reported in The Lawyer last week (16 June), Allen & Overy is again sailing close to the wind with its conflicts policy, advising both WPP and Cordiant’s banks, which may have the final say over who Cordiant is sold to.

The Clifford Chance team is being led by insolvency partner Mark Hyde and corporate partner Daniel Kossoff.

Cordiant is being advised by Macfarlanes senior partner Robert Sutton and White & Case insolvency partner Dan Hamilton. Bingham McCutchen is acting for Cordiant’s noteholders.