Ad Giant WPP Sells Kantar Stake to Bain

By Nick Kostov 

WPP PLC has agreed to sell a 60% stake in its Kantar market-research unit to Bain Capital Private Equity, raising about $3.1 billion in the advertising giant's biggest move yet to refocus its portfolio.

The London-based company, 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.

Since taking the helm of WPP in September last year, new Chief Executive Mark Read has moved to pare down the sprawling ad empire to satisfy marketers' demands for more nimble, tech- and data-savvy agencies.

The overhaul comes as WPP and its rivals wrestle with a number of challenges, from new competitors such as consulting firms encroaching on their turf, to the growing power of Facebook Inc. and Alphabet Inc.'s Google.

The 52-year-old Briton, who became CEO after the abrupt departure of longtime leader Martin Sorrell, quickly combined creative agency Young & Rubicam and digital-ad firm VML in a bid to bolster lackluster performance. Soon after, he merged storied creative agency J. Walter Thompson and digital specialist Wunderman.

In recent weeks, WPP has also sold its majority stake in U.K. postproduction company The Farm as well as its stake in communications and sports-marketing group Chime Group Holdings.

Still, the sale of a majority stake in Kantar marks Mr. Read's biggest move since taking the helm. Kantar offers research, data, social-media moderating and other services aimed at helping companies tailor their brands, advertising campaigns and products to reach their target market. It has weighed on WPP's results for a number of years, as clients have turned to 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, adding that the company should focus on "data-driven marketing rather than data ownership."

Bain emerged as the winning bidder for Kantar at the start of the month, beating out competition from a group of rival buyout firms, when WPP announced the pair had entered exclusive talks. Including debt, the transaction values Kantar at about $4 billion.

The U.S. private-equity group now faces the task of spearheading a turnaround of Kantar away from the glare of public markets. WPP stands to reap some benefit if Bain succeeds by retaining a 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 WPP's shareholders and regulators, as well as the completion of a Kantar reorganization.

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

July 12, 2019 09:22 ET (13:22 GMT)

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