WPP is today announcing that it has entered into an agreement to sell 60% of Kantar, its global data, research, consulting and analytics business, to Bain Capital (the “Proposed Transaction”).
The Proposed Transaction creates a strong partnership for the development and growth of Kantar and values the whole of Kantar at a headline enterprise value of c.$4.0bn (c.£3.2bn).
On 25 October 2018, WPP highlighted the significant opportunity to develop Kantar into the world’s leading data, insights and consulting company. The Board considered that the best way to unlock Kantar’s potential and maximise shareholder value was with a strategic or financial partner. It was envisaged that WPP would remain a shareowner with strategic links to ensure that the benefits to clients were realised.
Mark Read, Chief Executive Officer, WPP, said, “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. I would like to thank Eric Salama, his team and everyone at Kantar for their tremendous contribution to WPP – a contribution that will continue as we develop the business together. This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8% of our current market value to shareholders planned, we are making good progress with our transformation.”
Kantar has attracted significant levels of interest from potential financial partners, leading to the agreement today with Bain Capital. The WPP Board believes that the Proposed Transaction will allow Kantar to strengthen its industry-leading position through the combined expertise and resources of Bain Capital and WPP. It also crystallises significant value for WPP’s shareholders, while giving them continued exposure to an attractive business with the potential for further value realisation in the future.
Luca Bassi, a Managing Director at Bain Capital Private Equity, said, “Kantar is a market leader in many areas and we are excited to be partnering with its management team and WPP to build on this remarkable platform for growth. We see many opportunities for expansion and will invest in technology to expand the company’s capabilities and reinforce its global leading position.”
The transaction values 100% of Kantar at c.$4.0bn (c.£3.2bn), equivalent to a calendar 2018 EV/EBITDA multiple of 8.2x based on Kantar’s headline EBITDA (excluding WPP overhead) of £386m. The equity value after expected completion adjustments is c.$3.7bn (c.£3.0bn). After transaction costs, tax and WPP’s continuing investment of c.$0.4bn to own 40% of the equity in Kantar, net cash proceeds to WPP are expected to be c.$3.1bn (c.£2.5bn). The consideration is payable in cash. WPP may receive additional consideration over the next three years in respect of certain contingent liabilities, in the event that such liabilities are lower than estimated. Additionally, WPP may receive certain other payments during the life of its partnership with Bain Capital. The amounts of these payments are dependent on future events and outcomes which are too uncertain to allow meaningful estimation today. Under no circumstances can such contingent liabilities, events and outcomes lead to any reduction or repayment of the consideration to be received by WPP on completion.
Christophe Jacobs van Merlen, a Managing Director at Bain Capital Private Equity, said, “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.”
At the present time, the WPP companies constituting the Kantar business (the “Kantar Group”) sit within the wider WPP group. The Kantar Group will, therefore, be carved out of the wider WPP group by way of a reorganisation and placed into a holding structure ahead of completion (the “Kantar Reorganisation”). It is expected that completion will take place in a number of stages. The consideration is subject to adjustment on each completion to take into account any movements in net debt between the Kantar Group and the WPP Group arising as a result of the Kantar Reorganisation.
Eric Salama, CEO, Kantar, said, “Our new ownership structure presents a great opportunity for Kantar, our employees and our clients. In Bain Capital we have a partner who shares our ambition, brings relevant expertise and – with WPP – can help us accelerate our growth and impact for clients. 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.”
Completion (and associated proceeds) relating to a large majority of Kantar’s operations is expected in early 2020 (“First Completion”) and is conditional on the satisfaction (or waiver, where applicable) of the following conditions: