Private equity firms eye WPP’s Kantar unit
WPP (WPP) 879.8p
Gain to date: 3%
Original entry price: Buy at 854p, 14 March 2019
Global advertising play WPP (WPP) has started to creep in the right direction since we added it to our Great Ideas portfolio in March.
Reports suggest there are as many as five private equity suitors for the company’s Kantar market research business.
As we discussed in our original piece, selling this business should help to reduce borrowing and could facilitate a one-off return of capital to shareholders.
The company has also marked 12 months since the acrimonious departure of its founder Martin Sorrell. Last month chief executive Mark Read described 2019 as the ‘foundational year’ in the company’s turnaround.
Read will need to be mindful of the competitive threat posed by French rival Pubilics which has bolstered its digital marketing credentials with the $4.4bn purchase of Alliance Data Systems’ Epsilon unit.
Another potential concern for WPP shareholders is that Epsilon’s price tag was ower-than-expected with a possible negative read-across for its similarly data-driven Kantar division.
SHARES SAYS: The Kantar sale should be a positive development if WPP gets a good sales price. Look out for a first quarter trading update on 26 April for the media group.