Cordiant, Organic Founders Reorganize Agency Holdings

Two Web agencies are likely to see new management, as the owners of CCG.XM and Organic restructure their firms.

Earlier this week, London-based ad agency giant Cordiant Communications Corp.

said during the UBS Warburg Media Conference in New York that it plans to dissolve CCG.XM, its New

York-based interactive shop, and merge it back into a traditional agency.

Cordiant management said the move comes amid “exceptionally difficult” conditions for the

advertising and marketing communications sector, that had led to “an unprecedented rate of decline

in marketing expenditure, which has accelerated across the second half of the current year.”

As a result, CCG.XM will become part of 141 Worldwide.

The news concludes the relative independence CCG.XM had enjoyed since it was formed in 2000 to

consolidate and oversee Cordiant’s disparate interactive shops — which included the Web marketing

divisions of 141 Worldwide and Bates. Operating in 14 countries and with special strengths in

Singapore and Australia, CCG.XM did work for clients including Hyundai, Accenture, Compaq and GM.

The restructuring comes three months after Cordiant announced its first major effort to combat

the slackness in ad spending, a broad cost-reduction program that included layoffs. But in recent

weeks, the company said it had been forced to cut its own guidance for the year in light of

continued difficulties.

Meanwhile, the majority owner of San Francisco-based Organic sold its shares to Seneca

Investments. The news continues Organic’s efforts to go private through a buyout by Seneca, a

holding company set up by ad agency holding company Omnicom.

In establishing Seneca, Omnicom handed over its 22 percent interest in Organic and other

interactive shops in which it once had stakes, including Agency.com and Razorfish. Since then, Seneca has completed a buyout of Agency.com.

Now, the same looks to be in store for Organic, as Organic Holdings — a company set up by the

agency’s founders to hold their majority stake in Organic stock — sold its stock on Tuesday to

Seneca.

Seneca also got the stock at a bargain — Organic said the holding company’s cash offer had

been reduced from $16.2 million (or $0.31 per share) to $8.5 million ($0.16 per share).

Following the sale, Seneca holds 80.9 percent of Organic’s outstanding shares. The remainder

is expected to be voted to Seneca in a shareholder meeting, pending approval by the company’s

board of directors.

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