Bain Capital is acquiring 60% of WPP-owned Kantar for US$4 billion. The deal will simplify and reposition WPP for growth, whilst “unlocking significant value for shareholders” when completed.
According to the press release, proceeds to WPP on completion after tax and continuing investment in Kantar is expected to be US$3.1 billion. About US$1.2 billion balance of proceeds will be returned to shareholders. Completion and associated proceeds relating to no less than 86% of Kantar are expected in early 2020, subject to approval by WPP shareholders and other customary regulatory and legal approvals.
WPP CEO Mark Read said with a much stronger balance sheet and return of approximately 8% of its current market value to shareholders, the organisation is making good progress with its transformation. “Kantar is a great business and we look forward to working with Bain Capital to unlock its full potential. 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,” he added.
As part of the deal, WPP will retain 60% of net proceeds to reduce debt to the low end of the target leverage range of 1.5 to 1.75 times average net debt/EBITDA for 2020. The valuation of Kantar in the proposed transaction is equivalent to 8.2 times of Kantar’s 2018 headline EBITDA.
Kantar CEO, Eric Salama said the new ownership structure presents a great opportunity for the company. With Bain Capital as a partner who shares its ambition and brings relevant expertise, Kantar can accelerate its growth and impact for its clients, he explained. “We are focused on delivering ‘human understanding at scale and speed’ and the ‘best of Kantar’ more consistently. We will do so by investing more in talent and by becoming a more technology-driven solutions provider.”
Meanwhile, Luca Bassi, a managing director at Bain Capital Private Equity, said that there are opportunities for expansion and Bain Capital will invest in technology to expand Kantar’s capabilities and reinforce its global leading position.
Christophe Jacobs van Merlen, managing director at Bain Capital Private Equity, added: “We believe that we are well-positioned to support Kantar, alongside WPP, in driving forward the business in a rapidly changing industry. Our deep sector knowledge, operational expertise and strong track record of partnering with management teams to accelerate growth gives us confidence that we can help Kantar grow both organically and by acquisition.”