Shares in struggling ad giant WPP have leaped almost 10% following weekend reports that French rival Havas has held takeover talks with the UK firm.
One source suggested Havas may look to buy WPP’s media agency, WPP Media, while another suggested it could “build a sizeable stake and seek a board seat.”
The Times also reported that “senior City sources” had indicated that private equity firms Apollo and KKR had run the rule over assets of the group. However, the newspaper also said sources have played down the likelihood of either group making bids for the troubled holding company.
Apollo looked at the business last year, according to the story, although a spokesperson has since told PRWeek: “We are not in discussion or considering a bid for WPP.”
KKR – which last year acquired corporate and financial comms behemoth FGS Global from WPP – has so far made no comment.
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WPP has been facing a tricky time lately. Its stock price slumped to to its lowest level in 27 years in late October after the group missed forecasts again at its latest quarterly results, taking its market capitalisation from a £25bn high eight years ago, when it was the world’s largest marketing services company, to around £4bn today. It is facing a slew of US lawsuits as a result, as well as losing key clients including Mars.
CEO Cindy Rose labelled WPP’s recent performance “unacceptable” and said “we are taking action to address this.” WPP recently appointed management consulting firm McKinsey to advise on its much-anticipated strategy review.
Last week, Campaign reported that WPP’s recently-appointed chief executive Rose, along with chair Philip Jansen, had combined to buy back a total of 100,000 shares for about £287,000. The move appeared to be designed to lift investor sentiment with regard to the company’s embattled stock. UK corporate governance rules prohibit such buybacks if a public company is in formal merger or takeover discussions.
Havas has declined to comment on the speculation, with a spokesperson telling PRWeek: “Per group policy, we do not comment on market rumours.”
Earlier this year Accenture, the US consultancy group including a large advertising business, also reportedly held talks with WPP over a potential deal or partnership.
