Could WPP be going Chinese?
According to Sky News China’s Alibaba and Tencent (usually fierce rivals) and China Media Capital Holdings (backed by the Chinese government so important) are interested in taking minority stakes valued at up to £2bn in WPP’s Chinese operations. WPP executive chairman chairman Roberto Quarta and joint interim COO Andrew Scott are reported to have travelled to China to try to tie up a deal.
£2bn or so would be very handy for WPP which has over £5bn of debt and would take the pressure off a possible sale of research operation Kantar. Kantar struggles in the profit stakes but, following Interpublic’s $2bn deal for most of data firm Acxiom, such businesses are back in fashion.
Alibaba and Tencent are the Google and Facebook of China, with a lot of Amazon thrown in.
If such a deal happens it raises the intriguing prospect of Chinese interests eventually taking over all of WPP. Far Eastern buyers have been snapping up smaller Western marcoms companies for years now but WPP is the biggest. If a WPP deal happens in China Alibaba, Tencent and CMC would have, in effect, a blocking stake in any sale of WPP and may choose to own it all themselves. Alibaba and Tencent are both valued at over $300bn, far ahead of WPP’s £15bn or so.