New Delhi: London-based advertising company WPP Plc on Friday said it has entered into an agreement to sell 60% stake of market research firm Kantar to Bain Capital Private Equity. The sale to Bain Capital is aimed at steering the world’s biggest advertising company back to growth.
The deal has valued all of Kantar at $4.0 billion, WPP Plc said. Net proceeds from the deal tax and a reinvestment in Kantar are estimated at $3.1 billion, with the ad giant retaining about 60% of net proceeds to pare debt.
The balance of the proceeds would be returned to shareholders, WPP said. The deal is expected to be completed in early 2020, subject to approval from WPP's shareholders and regulators, as well as to the completion of a reorganisation at Kantar, WPP said.
The deal will be marginally dilutive to its headline earnings per share in 2021, and its dividend policy will remain unchanged as a result of the transaction.
Mark Read, chief executive officer, WPP, said “As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth while our clients continue to benefit from its services and capabilities. I would like to thank Eric Salama, his team and everyone at Kantar for their tremendous contribution to WPP – a contribution that will continue as we develop the business together. This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8% of our current market value to shareholders planned, we are making good progress with our transformation."
Luca Bassi, managing director at Bain Capital Private Equity, said “Kantar is a market leader in many areas and we are excited to be partnering with its management team and WPP to build on this remarkable platform for growth. We see many opportunities for expansion and will invest in technology to expand the company’s capabilities and reinforce its global leading position."
WPP, which owns advertising agencies such as J Walter Thompson and Ogilvy, is undergoing an internal overhaul as it has been facing multiple profit warnings since 2017. The abrupt exit of its founder Martin Sorrell in August 2018 over a complaint of misconduct, which he has denied, has added to the woes of the company.