Advent and Blackstone among bidders for WPP's Kantar, say sources
Buyout funds in talks on majority stake in advertising group's data-analytics unit
London — A series of buyout funds including US firms Advent and Blackstone are in talks with advertising group WPP to explore bids for a majority stake in its data analytics unit Kantar, said four sources familiar with the matter.
The sale, led by Goldman Sachs, may value Kantar at up to £3.5bn, but some private equity investors are fretting about the business's decline in profit and revenue in recent years.
Hellman & Friedman and CVC Capital Partners are also working on the deal, the sources said, while industry players have so far shied away from the process.
Bain Capital has also expressed interest in making a bid for Kantar, another source said, adding Bain might later decide to team up with one of the other buyout funds in the race.
WPP sent out confidential information packs this week, with nonbinding offers expected in April, one of the sources said.
WPP, Blackstone, Advent and CVC declined to comment, while representatives at Bain Capital and Hellman & Friedman were not immediately available.
WPP, the owner of agencies including JWT, Finsbury and Ogilvy, is in the middle of an overhaul launched by its new boss Mark Read following several profit warnings in 2017 and 2018.
The London-based group wants to sell a majority stake in Kantar to reduce debt as it braces for a tough year, with revenue expected to drop by between 1.5% and 2% in 2019.
Kantar, a leading player in market research, provides brand and marketing communications research for some of the world’s largest advertisers. Yet its revenue has fallen in recent years, with underlying sales dropping 2% in 2018 to £2.6bn and operating profit 14% to £301m.
“The deal poses some challenges for private equity funds as it’s been on a downward trajectory for a while,” one source said.
Private equity investors are examining the turnaround potential of a possible deal, the sources said, and would value the business at up to 10 times its earnings before interest, tax, depreciation and amortisation (Ebitda), hoping to reignite growth within the first three years of their investment.
Liberum analyst Ian Whittaker said in February that Kantar could fetch more than £3bn, with WPP raising close to £2.1bn-£2.2bn from a 60% stake sale.
WPP boss Read aims to complete the sale by the end of the summer as he needs cash to steer the world’s biggest advertising group back to growth.
Read took the helm of WPP in 2018, pledging to spend £300m to restructure the group and bring it back in line with peers by the end of 2021.
Founder Martin Sorrell, 74, remains a major WPP shareholder but is now running a new company which in 2018 beat WPP in the race to buy Dutch digital agency MediaMonks.