Cordiant Communications Group PLC - `CCG' - Acquisition of Diamond Ad Ltd.

LONDON--(BUSINESS WIRE)--December 13, 1999--

CCG (London Stock Exchange:CRI) (NYSE:CDA), the global marketing communications group, today announces that it has signed a definitive agreement for the acquisition of an 80 per cent. shareholding in Diamond Ad Ltd. ("Diamond").

-- Diamond is currently the 3rd largest agency in Korea

-- Establishes CCG's position in the high growth Korean
   advertising market, currently the 10th largest in the world

-- Consolidates CCG's longstanding relationship with Hyundai

-- Diamond to form the Asian Pacific hub of new network to service
   Hyundai and other clients globally

Under the terms of the agreement, CCG will acquire an 80 per cent interest in Diamond for an initial consideration of KW27 billion ((pound)15 million). The net debt in Diamond at completion is expected to be around KW22 billion ((pound)12 million). Deferred consideration will be payable based on the results of Diamond for the period ending December 2001. The acquisition is expected to be earnings enhancing in the year ending 31 December 2000.

Commenting on today's announcement, Michael Bungey, Chief Executive of CCG said, "Diamond is a major agency in one of the world's fastest growing large advertising markets. We have worked with Soo-Sam Chae for several years and are delighted that he is joining our management team. As well as consolidating one of our most important client relationships, this acquisition will form the base of a new network servicing Hyundai and other clients." -0-

1. INTRODUCTION

CCG, a global marketing communications group, today announces that it has signed a definitive agreement to acquire a majority shareholding in Diamond Ad Ltd. ("Diamond"), the third largest advertising agency in South Korea. Diamond is currently majority owned by Hyundai Merchant Marine Co. Ltd. ("Hyundai Merchant Marine"). The transaction will enable CCG to capitalise on Diamond's strong position in the Korean advertising industry as well as enhancing CCG's long-standing relationship with many Hyundai clients. Diamond will form the Asian hub of a CCG network, to be named Diamond, that will service Hyundai and other clients globally.

Under the terms of the agreement, CCG will acquire an 80 per cent. interest in Diamond for an initial cash consideration of KW27 billion ((pound)15 million). The net debt in Diamond at completion is expected to be around KW22 billion ((pound)12 million). Deferred consideration will be payable based on the results of Diamond for the 42 months ending 31 December 2001. The total consideration including 80 per cent of the net debt in Diamond at the date of completion is capped at a maximum of KW150 billion ((pound)82 million). The acquisition is expected to be earnings enhancing in the year ending 31 December 2000.

2. BENEFITS OF THE ACQUISITION

The acquisition of Diamond is expected to deliver the following benefits:

-- The Korean advertising market, the 10th largest in the world, is
   expected to grow rapidly over the next several years. The
   acquisition of Diamond establishes CCG's position in this
   important market.

-- Hyundai Motors is one of CCG's most important international
   clients. In line with CCG's strategic objective of increasing its
   revenue contribution from multinational clients, the acquisition
   of Diamond will strengthen its relationship with the Hyundai
   group of companies and other Korean companies and enhance CCG's
   opportunities to service Hyundai in Korea and elsewhere in the
   world.

-- The Group expects to work closely with Diamond's management to
   expand the range of services the agency offers to clients,
   including media planning and buying and diversified marketing
   services.

The acquisition is expected to be earnings enhancing in the year ending 31 December 2000.

3. MANAGEMENT

Soo-Sam Chae, the current President and Chief Executive of Diamond, will continue to manage the business, supported by his senior management team.

4. FURTHER INFORMATION ABOUT CCG

CCG is a global marketing communications group. The group comprises Bates Worldwide, one of the largest advertising and integrated communications networks in the world; Scholz & Friends, the largest multinational advertising network headquartered in Germany; a 50 per cent. shareholding in Zenith Media Worldwide, a global specialist media services and planning agency; HP:ICM, event conference and exhibition management; and a 30 per cent. shareholding in The Facilities Group, a print-production agency. CCG recently announced the proposed acquisition of Healthworld Corporation.

The group's principal corporate offices are located at 121-141 Westbourne Terrace, London W2 6JR.

5. FURTHER INFORMATION ABOUT DIAMOND

Diamond was established in 1983 by the Hyundai group for the purpose of providing a full range of advertising and marketing services in Korea. Other industrial groups in Korea followed a similar strategy, and the three largest agencies in Korea are each linked to one of the major industrial groups. Traditional advertising through the three major media (television, radio and press) is Diamond's largest area of business. In 1998, Diamond was ranked as the third largest advertising agency in Korea in terms of gross billings.

In the year ended 30 June 1999, Hyundai group companies accounted for approximately 80 per cent. of Diamond's gross billings. The most important clients amongst these were Hyundai Motors, Kia Motor, Hyundai Securities, Hyundai Electronics and Hyundai Engineering and Construction. Diamond is expected to continue to perform traditional and non-traditional advertising and integrated marketing communications services for major Hyundai clients. Diamond has many non-Hyundai clients in Korea and expects to grow the proportion of independent business in the future.

Diamond's head office is in Seoul, with branch offices in Pusan (Korea), Los Angeles, Frankfurt and Beijing. At present, substantially all of Diamond's business is conducted in Korea. As at 30 June 1999, Diamond employed 452 staff.

In 1997 and 1998, the Korean advertising market suffered from the recession in South East Asia, but is recovering very strongly in 1999. This recovery is expected to continue, and the market should be boosted by the 2002 Soccer World Cup to be held in Japan and Korea, of which Hyundai Motor is a major sponsor. In 1998, South Korea was the 10th largest advertising market in the world.

6. TERMS OF THE ACQUISITION

Under the terms of the agreement which has been entered into between CCG, Hyundai Merchant Marine and another Hyundai shareholder, CCG will make an initial cash payment of KW27 billion ((pound)15 million). Diamond is expected to have net debt of approximately KW22 billion ((pound)12 million) at the date of completion of the acquisition.

Depending on Diamond's financial performance, CCG will make deferred payments calculated as 80 per cent. of Diamond's audited operating profit after tax multiplied by nine; where the operating profit is averaged over the 42 months to 31 December 2001. Each payment will be made after deducting the initial consideration and the 80 per cent. of the net debt on completion. Earn-out payments are scheduled for 2000, 2001 and 2002.

The sum of the initial consideration, 80 per cent. of the net debt at the date of completion of the acquisition and the earn-out payments is capped at a maximum of KW150 billion ((pound)82 million).

The 20 per cent. of Diamond not owned by CCG will be held by Hyundai Merchant Marine.

Completion of the acquisition which is subject to certain conditions, is expected to take place in the course of the next few weeks.

7. SUMMARY FINANCIAL INFORMATION ON DIAMOND

In the year ended 30 June 1999, revenue from the ongoing advertising operations of Diamond was KW48.7 billion ((pound)26.6 million) and operating profit before exceptional items amounted to KW17.4 billion ((pound)9.5 million). According to the audited financial statements of Diamond for the year ended 30 June 1999, Diamond had a net deficit in shareholders' funds of KW31.7 billion ((pound)17.3 million) as at 30 June 1999. The actual shareholders' funds acquired will differ materially from this as a result of cash and debt movements and the disposal of non core businesses between 30 June and completion.

Since June, Diamond has continued to perform well. CCG intends to invest in new infrastructure and development to support the proposed expansion of Diamond.

Note: All amounts shown in Korea Won (KW) have been translated into pounds sterling ((pound)) at a rate of (pound)1 : KW1,828.