WPP Sells Market-Research Stake -- WSJ
July 13 2019 - 3:02AM
Dow Jones News
By Nick Kostov
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 13, 2019).
WPP PLC has agreed to sell a 60% stake in market-research firm
Kantar to Bain Capital Private Equity, raising about $3.1 billion
in the advertising giant's biggest move yet to refocus its
portfolio.
London-based WPP, which will retain 40% of Kantar, said Friday
it plans to return $1.2 billion to shareholders and use the rest of
the sale proceeds to reduce debt.
The sale of the Kantar stake comes as established advertising
companies like WPP face a range of challenges, from increased
competition due to consulting firms encroaching on their turf, to
the growing power of Facebook Inc. and Alphabet Inc.'s Google.
Since taking the helm in September, WPP chief Mark Read has
moved to pare down the sprawling ad empire as marketers look to
work with agencies that are more nimble and tech savvy. Kantar, in
particular, has weighed on WPP's results, as clients in recent
years have turned to other sources for marketing help.
Mr. Read, who became chief executive after the abrupt departure
of longtime leader Martin Sorrell, quickly combined its Young &
Rubicam creative agency with digital-ad firm VML in a bid to
bolster lackluster performance. Soon after, the 52-year-old Briton
merged storied creative agency J. Walter Thompson and digital
specialist Wunderman.
In recent weeks, WPP has also sold its majority stake in
postproduction company The Farm as well as its stake in Chime Group
Holdings, a communications and sports-marketing business. Still,
the sale of a majority stake in Kantar marks Mr. Read's biggest
move so far.
Kantar offers research, data, social-media moderating and other
services to help companies tailor their brands, advertising
campaigns and products to their target market. But its customers
have sought out less labor-intensive digital sources for customer
insights.
"Data is critical to WPP's clients and critical to WPP, but
there's a growing number of sources of data," Mr. Read told
reporters Friday, adding that the company should focus on
"data-driven marketing rather than data ownership."
Including debt, the stake sale values Kantar at about $4
billion. Bain got the edge over a group of other buyout firms
bidding for Kantar when at the start of the month WPP announced the
pair had entered exclusive talks.
The U.S. private-equity group can now attempt a turnaround at
Kantar away from the glare of public markets. If Bain succeeds, WPP
stands to benefit through its minority stake in Kantar.
Luca Bassi, a managing director at Bain, said there were
opportunities to invest in Kantar's technology and expand its
capabilities. "Market research remains the cornerstone of business
decision making," Mr. Bassi said. "All over the world all companies
and industry will require more data, and more solutions to analyze
and interpret that data."
WPP expects the deal to be largely complete by early 2020,
although it remains subject to approval from the company's
shareholders and regulators.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
July 13, 2019 02:47 ET (06:47 GMT)
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