Bain Buys Huge Stake in Market Research Business for $4 Billion
Bain Capital agreed to buy 60% of WPP Plc’s market research unit Kantar in a deal that values the business at $4 billion.
(Bloomberg) -- Bain Capital agreed to buy 60% of WPP Plc’s market research unit Kantar, bringing the ad group $3.1 billion to cut debt and return funds to investors hit by a share price slump.
The private equity firm entered exclusive talks with WPP last week after beating out rival buyout companies in an auction. WPP will retain around 60% of the proceeds to reduce borrowing to the low end of a target range and return the rest to shareholders, it said in a statement.
The price is in line with Kantar’s $4 billion valuation that Bloomberg reported when the exclusive talks began. Bain was competing against Apollo Global Management, Platinum Equity and Vista Equity Partners in the final round of bidding, people familiar with the matter said previously.
What Bloomberg Intelligence Says
“WPP could tender a sizable chunk of its debt stack after receiving cash from the potential Kantar disposal, which is expected to complete in the short term.”
--Aidan Cheslin, credit analyst
Click here to read the research
WPP shares rose 0.6% as of 9:11 a.m. in London on Friday. The stock lost more than a third of its value last year, when company founder Martin Sorrell resigned after a misconduct probe and the company lost accounts with major clients.
WPP has struggled to adapt its global network of more than 100 agencies to a shift in client spending toward digital marketing and away from the TV and billboard ads where the group is traditionally strong. Web giants such as Facebook Inc. and Amazon.com Inc. are cutting out agencies and working directly with brands.
The Kantar sale is part of new Chief Executive Officer Mark Read’s push to cut debt and simplify the company. Sorrell had strongly advocated keeping Kantar, which analysts say has underperformed the rest of WPP in recent years.
Kantar’s CEO Eric Salama said last month that a new majority owner could look for ways to speed up its time to market for data and services, drive growth with existing clients and move its business more into digital activities.
“It’s not just a money thing. The people at Bain bring real operational expertise that will really help us,” Salama told reporters on a call after the deal was announced.
To contact the reporter on this story: Thomas Pfeiffer in London at tpfeiffer3@bloomberg.net
To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Stefan Nicola, John Lauerman
©2019 Bloomberg L.P.