Bain Capital To Buy Majority Stake In WPP’s Kantar For $4 Billion

WPP said Friday it has sold a 60% majority stake in Kantar to Bain Capital in a deal that values the company at around $4 billion. Read the release.

The news marks the end of a months-long bidding process that involved Apollo Global Management and Vista Partners. Bloomberg reported earlier in July that Bain had emerged as the highest bidder.

WPP will maintain a 40% stake in Kantar and continue to have a strategic relationship with the firm. The deal will help WPP raise $3.1 billion to put toward its debt, with $1.25 billion set aside to pay back shareholders.

“Kantar is a great business and we look forward to working with Bain Capital to unlock its full potential,” WPP CEO Mark Read said in a statement. “As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth while our clients continue to benefit from its services and capabilities.”

WPP has been trying to offload Kantar for months as it slims down its sprawling empire and focuses on growth. The holding company had almost $4 billion wiped off its market cap last year after posting consecutive quarters of revenue decline and lowering its 2018 guidance.

WPP is slowly inching its way back to performance under Read’s strategy of divesting noncore assets and investing in growth areas: digital and data. Since Read took the helm in September 2018, the group has disposed of more than 16 companies and raised upwards of $900 million. It also completed cross-discipline mergers between VML and Young & Rubicam, as well as Wunderman and J. Walter Thompson.

Kantar is WPP’s biggest divestiture yet. The market research firm has been underperforming the rest of the group for the past decade, but former CEO Martin Sorrell saw it as a differentiator and was a big proponent of keeping it under the WPP umbrella.

“To be absolutely, brutally frank about it, I don’t think we’ve leveraged Kantar, and I don’t think Kantar has leveraged GroupM and Wunderman, in the way we should’ve done,” Sorrell said on WPP’s Q4 2017 earnings call, his last as CEO. “We must continue to try and pull those things together.”

But with automated solutions and digital data replacing traditional market research, Read saw Kantar as a slow growing legacy asset. WPP began shopping Kantar in October 2018, just a month after Read took over the job.

“The data insights and consulting business is extremely valuable to our clients, but it’s probably the area of our business that’s been the most disrupted by new technologies and new companies,” Read said on WPP’s Q3 2018 earnings call. “There’s a tremendous amount of information from the internet or from the interactions that are tracked on the internet.”

As for Kantar, the firm will continue to work with its current clients, including those that work with WPP.

“Our ability to drive clients’ database solutions is somewhat irrespective of ownership,” Kantar President Wayne Levings said in a 2018 interview with AdExchanger.

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