WPP’s dispute with Japanese agency ADK and putative new owner Bain Capital is heading to court, as it was always likely to.
WPP owns 24 per cent of Japan’s third largest agency and, along with some other shareholders, thinks Bain’s $1.3bn offer is too low. It also says that ADK has no right to end its current relationship with WPP in this way, which ADK disputes.
WPP boss Sir Martin Sorrell (left) told the FT: “We think they haven’t broken the agreement in the right way.”
ADK president Shinichi Ueno says:“If there is a lawsuit, it will happen in Japan. Having consulted with several law firms, we are fully prepared for it so we think we have a good chance to win.”
ADK gives WPP access to the Japanese market although neither party is likely to see the arrangement as successful. ADK says it’s been stymied in its expansion efforts outside Japan by being forced to deal only with WPP-associated companies.
It’s hard to see how WPP could revive the relationship other than through a full bid and no-one expects that. Another problem for WPP is that ADK (and Bain eventually presumably) plans to sell down its $500m stake in WPP, the last thing WPP needs as its shares have fallen by nearly a third this year following growth warnings.