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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  WPP Group    WPP   JE00B8KF9B49

WPP GROUP

(WPP)
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WPP : Sells Market-Research Stake

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07/13/2019 | 02:48am EDT

By Nick Kostov

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

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Financials (GBP)
Sales 2019 12 939 M
EBIT 2019 1 971 M
Net income 2019 1 079 M
Debt 2019 4 251 M
Yield 2019 5,90%
P/E ratio 2019 11,6x
P/E ratio 2020 11,5x
EV / Sales2019 1,31x
EV / Sales2020 1,39x
Capitalization 12 720 M
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 1 107,27  GBp
Last Close Price 1 008,00  GBp
Spread / Highest target 50,8%
Spread / Average Target 9,85%
Spread / Lowest Target -24,4%
EPS Revisions
Managers
NameTitle
Mark Julian Read Chief Executive Officer & Executive Director
Roberto Quarta Non-Executive Chairman
Andrew Grant Balfour Scott Chief Operating Officer
Paul W. G. Richardson Executive Director & Group Finance Director
Stephan Pretorius Chief Technology Officer
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