WPP CEO Mark Read (pictured) has revealed plans to put Kantar up for sale, following a weakening in the network’s business for North America and its creative agencies. In a recent financial statement, he added there is significant opportunity to develop Kantar into the world’s leading data, insights and consulting company.
“We believe in the potential for Kantar but given our many priorities, we need to make tough choices and we believe that the best way to unlock this potential is with a strategic or financial partner,” Read explained. As such, the board has since approved a formal process to review the strategic options that will “maximise share owner value”. It is also “envisaged that WPP will remain a share owner” with strategic links to ensure that the benefits to clients are realised. Read added:
Preparations are underway, involving Kantar management, and unsolicited expressions of interest have been received.
“This move, together with the actions that we will continue to take, should further improve our balance sheet. In future, we will pay greater attention to capital discipline and focus our acquisition spending only on the most strategic opportunities that we can tightly integrate into our organisation.
North America market declines, while Asia Pacific remains stable
According to WPP’s Q3 financial results, slowdown was experience in the third quarter with like-for-like revenue less pass-through costs down 1.5%. This was particularly due to North America and creative agencies, issues highlighted in interim results.
North America experienced further continued pressure with third quarter like-for-like revenue less pass-through costs down 5.3% after second quarter -3.3% and first half -2.9%. The UK and Western Continental Europe also both slowed with third quarter down 2.0% and 0.4% respectively.
Meanwhile, Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe were relatively stable with third quarter growth of 2.4%.
WPP has also highlight “good progress” on its asset disposal plan, raising £704million cash proceeds so far this year from 16 disposals. Net debt at 30 September was down £925million at 2018 exchange rates, reflecting asset disposals and improved NWC while net new business was at US$4.0 billion in first nine months.
Read also confirmed the retiring of Paul Richardson as group finance director after 22 years. Richardson, who will leave during the course of 2019, will work with WPP to ensure a smooth transition while his successor is found.
“[Richardson] has played a central role in building WPP, and on behalf of the Board and the company as a whole I would like to thank him for his contribution to our success over many years,” Read added.
Read said that a strategy update will be provided in December, which includes a new vision for the network, its growth opportunities and how best to capture them. This will be done through a simplified structure, investments in technology and talent, and a new “culture that draws the best and brightest to WPP”.