London: WPP is selling a 60 per cent stake in Kantar to private equity firm Bain Capital, valuing the data analytics business at about $4 billion (Dh14.68 billion) and giving the British owner of agencies including Ogilvy and Wunderman Thompson funds to cut debt and rebuild.
WPP is restructuring following several profit warnings and the abrupt departure of its founder and former chief executive Martin Sorrell over alleged misconduct, which he denies.
Sorrell’s replacement Mark Read said the Kantar sale, which WPP expects to lead to proceeds of about $3.1 billion after tax and continuing investment, created value for WPP shareholders.
“With a much stronger balance sheet and a return of approximately 8 per cent of our current market value to shareholders planned, we are making good progress with our transformation,” said Read, who is in the process of simplifying the group.
WPP’s clients want it to integrate its agencies and digital capabilities to produce faster campaigns across multiple platforms, at a cheaper cost.
WPP said it will use about 60 per cent of the proceeds from Kantar to cut net debt to the low end of a targeted range of 1.5-1.75 times core earnings for 2020.
The rest of the money will be returned to shareholders, WPP said, adding the deal was subject to backing from investors and other regulatory and legal approvals.
Read said many leading private equity companies were interested in Kantar, which was launched by WPP in 1992 and offers insights into the views of customers and consumers in more than 100 countries, and WPP was very pleased to obtain a valuation of 8.2 times its 2018 earnings.
“Data is critical to WPP’s clients and critical to WPP, but there’s a growing number of sources of data,” he told reporters, adding that clients cared most about whether WPP could use data to drive marketing programmes, which it would continue to be able to do with Kantar after the deal.
Shares in WPP rose 0.5 per cent to 961 pence on Friday.