WPP board approves plans to sell off Kantar
Advertising giant WPP has confirmed it is reviewing its ownership of Kantar, the wing of the firm which contains its health, media and consulting practices. Following a vote by the board of WPP, the group will now explore the possibility of a sale with the potential for an external partner with WPP to remain as a shareholder.
WPP has suffered a turbulent 2018 to say the least. The company was rocked earlier in the year when its long-standing Chief Executive Officer Martin Sorrel was forced from the company following allegations of bullying and sexism surfaced, as well as claims of financial misconduct relating to his expenses. WPP has since been looking consistently to improve its balance sheet, which has been plagued by poor health over several quarters.
In October, this was compounded when the company’s share price plummeted more than 20% in early trading, after investors were left shocked by a large-scale miss in expected sales and the slashing of its full-year guidance. The City had expected the marketing and advertising group to report 0.3% growth in net sales for the third quarter, but WPP reported a fall of 1.5% after growth of 0.7% in the second quarter. The share slump saw the company’s stock valued at its lowest level since 2012, wiping almost £3 billion from the market value of WPP. This also saw the group forfeit its title as the world’s most valuable advertising group to its US rival Omnicom.
Now, Kantar’s sale, which had previously been estimated as being potentially capable of raising £3.5 billion for WPP will undoubtedly seem even more alluring. The board of WPP has backed the potential sale of Kantar, and the company is now understood to be reviewing its strategic options over Kantar’s ownership, exploring the possibility of an external partner with WPP remaining a shareholder. The speculation that Kantar might be on the way out of WPP ownership in this style has been trundling on for some time now, and in April, it was reported that Kantar Chief Executive Officer Eric Salama was seeking backers who might support a management buyout.
In a statement, WPP’s Chief Executive Mark Read said there was a “significant opportunity” for Kantar to be developed into “the world’s leading data, insights and consulting company.” At the same time, he added that WPP needed to make “tough choices” over its future, and that the best option was now selling a stake to a strategic or financial partner. "Unsolicited expressions of interest” are also reported to have been received for Kantar.
Read explained, "The board has approved a formal process to review the strategic options that will maximise share owner value. It is envisaged that WPP will remain a share owner with strategic links to ensure that the benefits to clients are realised."
Founded in 1993, Kantar consists of a network of around 30,000 employees working in 100 countries in various research, insight and consultancy disciplines. The firm is spread across 12 specialised operating arms, including the recently merged Kantar Consulting brand. Kantar Consulting had been tipped as a front on which the advertising giant was to hit back at the consulting industry, which has been encroaching rapidly on the market by buying up smaller agencies.
