WPP has joined Dentsu in the charity shop bargain bin, its shares tumbling 6.6% today following Dentsu’s 11% fall – presumably in sympathy unless someone knows something we don’t.
Dentsu is trying to offload its international business (HQ above) but, so far, there have been no takers with only Bain still apparently in talks after lukewarm interest from the much smaller trade rival Havas. A break-up of Dentsu International looks more likely with performance agency Merkle and media business Carat possibly of interest alongside fairly recent acquisition Tag. Dentsu Creative, although it has some talented people and produces good work in patches has never really functioned as a global force.
The same can’t be said of WPP and, to an extent, it’s surprising that no-one has nibbled at it, given that it’s now valued at less than £4bn even though its revenues are not far behind Omnicom and Publicis, valued far more highly. But its debts are equivalent to its market cap, surprising as debt reduction was supposed to be a flagship policy. Somehow or other the money still keeps leaking away.
Size and geographical spread no longer attract investors in the marcoms sector. Publicis Groupe, whose shares have also been under the hammer latterly, is still valued at more than Omnicom (just) even after Omnicom acquired IPG to be the biggest by revenue. You suspect that a smaller WPP would be far more attractive to investors and others than it currently is – still with around 100,000 people nobody else knows quite what to do with.
This is likely to be the focus of new CEO Cindy Rose’s strategic review (with McKinsey presumably) when it’s eventually announced. McKinsey, like its consultancy peers, rarely says you need more people.
