WPP CEO Mark Read has done his best deal yet, agreeing to sell 60 per cent of research operation Kantar to Bain Capital for £2.5bn, valuing the whole of Kantar at £3.2bn.
£1.5bn will go towards reducing WPP’s debt with £1bn returned to shareholders, which should make them happier and help WPP’s share price.
Read (below) says: “Kantar is a great business and we look forward to working with Bain Capital to unlock its full potential. 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 eight per cent of our current market value to shareholders planned, we are making good progress with our transformation.”
Luca Bassi, a managing director at Bain Capital Private Equity, says: “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.”
For the past few years Kantar has been regarded as a drag on WPP, underperforming the other bits of former CEO Sir Martin Sorrell’s empire. That may no longer be the case as its creative and media businesses have hit strong headwinds, particularly in the US.
WPP is disposing of some of its data business at a time when its rivals – Publicis Groupe with Epsilon and Interpublic with Axciom – are investing heavily in adding to theirs.
But Read seems to have got the best of both worlds with this deal. Kantar CEO Eric Salama, who’s staying on, may find life a little easier too with more independence, albeit two demanding shareholders.