WPP AUNZ – the details of a takeover masked as a merger creating $850m business
The deal to deliver majority control of STW to WPP forming a new company, WPP AUNZ, will see the business boast revenues of $850m after it received shareholder approval this week.
As part of the transaction STW will issue approximately 423 million shares to WPP at an implied price of $0.915, a 30% premium on the share price.
Total value of the deal is $512m and STW will assume net debt of approximately $125m, with WPP finishing with a 61.5% share in the company.
Some 38.5% of the business will remain in the hands of existing STW shareholders and WPP has agreed to a standstill provision locking its stake at 61.5% except in limited circumstances such as a takeover bid.
Also as part of the deal, the board of the new entity will be increased to a maximum of 11 people.
Included on the board will be Robert Mactier as independent chair, Kim Anderson, Graham Cubbin and Peter Cullinane as independent directors along with Paul Richardson who represented WPP on the previous board.
Joining the board to represent WPP will be WPP Australia’s current chair, Geoff Wilde, former Group M Australian CEO and chair John Steedman, WPP group planning director John Steel, Ogilvy & Mather Asia Pacific chair Paul Heath and WPP Indonesia and Vietnam chair Ranjana Singh.
On completion the normalised net revenues of the business will be $850m, with WPP CEO Martin Sorrell confident it will grow to become a $1b business.
The new WPP AUNZ aims to own 100% of client budgets
Since the announcement of WPP’s takeover bid, first revealed in Mumbrella, shares in STW have rallied.
Source: STW Communications Group EGM/IRESS at April 1 2016
STW will hold its annual general meeting in May when the market will be updated on the integration of the two companies under the leadership of CEO Mike Connaghan.
Simon Canning
