Cordiant to Buy 80% of Hyundai Unit

London-based Cordiant Communications Group said it will acquire a majority interest in Hyundai Group’s advertising unit for $43.8 million in cash and assumed debt as the world’s 15th-largest advertising company continues to boost operations in key advertising markets.

The owner of Bates Worldwide, which creates ads for Hyundai Motor America, the auto maker’s U.S.-based arm, will initially pay $24.3 million in cash and assume $19.5 million of debt for an 80% stake in Diamond Ad Ltd. The total payment could rise to as much as $133 million if profit-based performance targets are met through the end of 2001, Cordiant said.

Diamond, South Korea’s third-biggest ad company, is the latest firm to be snapped up as multinational advertising groups position themselves to offer clients a full range of marketing services. Advertising agencies for Japan-based Nissan Motor Co. reportedly are in discussions over forming a joint venture to handle that auto maker’s business globally. TBWA Worldwide, parent of Los Angeles-based TBWA/Chiat/Day, creates ads for Nissan in North America and Europe. Japan-based Hakuhodo handles Nissan’s account in that country.

“As well as consolidating one of our most important client relationships, this acquisition will form the basis of a new network servicing Hyundai and other clients,” Michael Bungey, Cordiant chief executive, said in a statement.

Cordiant, which services Hyundai in Asia-Pacific, Europe and North America, will combine its global service arrangements under the name Diamond in the months to come, an executive said. Irvine-based Bates USA West, part of Bates Worldwide, creates Hyundai ads for the United States.

Cordiant has been strengthening itself in key markets. Last month, it agreed to buy U.S. health-care marketing firm Healthworld Corp. in a $185-million stock swap to reinforce its nontraditional advertising operations in the world’s biggest ad market.

Cordiant also bought New York City-based Interactive Edge Inc., an interactive communication company, earlier this month for as much as $25 million.

Hyundai will retain a 20% stake of Diamond, and key management is expected to remain. The acquisition is expected to boost earnings in 2000, Cordiant said.

In South Korea, Diamond has operations in Seoul and Pusan. It also has offices in Los Angeles, Frankfurt and Beijing. For the year through June 30, Diamond had income from fees and commissions of about $42 million on sales of about $400 million, Cordiant said.

The sale helps South Korea’s biggest industrial group shed its assets to satisfy the government’s debt target. Korea’s top industrial groups must cut their debt-to-equity ratios to below 200% this month or face financial sanctions.

Bloomberg News was used in compiling this report.