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% 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% 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 programs, which it would continue to be able to do with Kantar after the deal.
Shares in WPP rose 0.5% to 961 pence on Friday.
"Kantar has the advantage of being relatively self-contained and so can be split off from the parent with minimal restructuring costs ... the proceeds of the sale will drop straight through to the balance sheet and shareholders pockets," Nicholas Hyett, Equity Analyst at Hargreaves Lansdown, said.
Luca Bassi, a London-based managing director at Bain, said there were opportunities to invest in Kantar's technology to expand its capabilities.
"Market research remains the cornerstone of business decision making," he told reporters. "All over the world all companies and industry will require more data, and more solutions to analysis and interpret that data."
The stake sale comes months after WPP said it suffered a sharp drop in first-quarter underlying sales in North America as the loss of work from clients such as Ford took a toll.
WPP sold its minority stake in sports, entertainment and communications company Chime for 54.4 million pounds this month as it divests non-core assets to return to growth.
It will invest in new creative staff and reduce costs by cutting offices and jobs. It also sold post-production services provider The Farm Group to Los Angeles-based Picture Shop.
"With the balance sheet back in rude health, and complexity significantly reduced, WPP needs to focus on the technological and creative transformation that will be vital to its long term future in a rapidly changing industry," analyst Hyett said.
WPP said the deal and use of proceeds would be marginally dilutive to headline earnings per share in 2021.
(Reporting by Noor Zainab Hussain in Bengaluru and Paul Sandle in London; Editing by Bernard Orr, Mark Potter and Alexander Smith)
By Noor Zainab Hussain and Paul Sandle