WPP has just announced that it has completed the sale of 60% of Kantar, its global data, research, consulting and analytics business, to Bain Capital Private Equity, relating to approximately 90% of the Kantar business, and that the proportionate transaction proceeds have been received.
Following final completion of the remaining Kantar business in the first half of 2020, total aggregate net proceeds after transaction costs, tax and WPP’s continuing investment in 40% of the equity of Kantar, are expected to be approx. $3.1 billion (about £2.4 billion – all dollar values are translated into £ at an exchange rate of £1: $1.31).
The Kantar transaction was originally announced in July when WPP CEO Mark Read said that with a much stronger balance sheet and a return of approx. 8% of current market value to shareholders, his company was making progress in its turnaround and transformation strategy.
WPP intends to retain around 60% of the net proceeds (approx. $1.9 billion or £1.4 billion) to reduce debt to the low end of the target leverage range of 1.5 – 1.75 x average net debt/EBITDA [1] for 2020.
WPP also plans to return about 40% of the net proceeds (approx. £950 million) to shareholders. The return will be executed via a share repurchase programme, to start shortly, with an initial tranche of approx.. £250 million, of the total £950 million, planned to be completed by March 2020.
Mark Read said: “The completion of the Kantar transaction, earlier than anticipated, achieves the objective we set out in December 2018 to strengthen our balance sheet, and substantially completes our disposal programme. It is a major step in simplifying and focusing WPP, and we intend to return around 8% of our share capital to shareholders through a buyback programme. The partnership with Bain Capital means that we will participate in the future growth of Kantar as well as allowing our clients to continue to benefit from Kantar’s services.”
[1] Net debt/EBITDA ratio calculated excluding impact of IFRS 16: Leases
