WPP take-over of STW gets overwhelming approval but shareholders question deal timing

STW WPP Merger got overwhelming support

STW WPP Merger got overwhelming support

A major shareholder group has questioned whether STW has sold out to WPP at a discount rather than holding out until the global holding company could have been forced to pay more for its 61.5% controlling stake in the business.

In an Extraordinary General Meeting that lasted just 30 minutes this morning, shareholders in STW overwhelmingly approved the $512m takeover by WPP which is being billed as a merger of the two businesses.

Almost 432m shares in STW will be handed to WPP, creating a newly merged business which will be known as WPP AUNZ and encompass a wide range of communications agencies including Ogilvy, JWT and GPY&R.

WPPOverseeing the meeting, STW chairman Robert Mactier said that the transaction represented a major opportunity for the newly aligned business.

However, the merger was not without its challenges, with David Allen of the Australian Shareholders Association questioning the timing of the deal.

Allen said the move by WPP was largely welcomed given the recent rise in the share price, but also raised issues about the size of the board which increased to a maximum of 11 members with five representatives of WPP elected.

“The Australian economy isn’t doing terribly well, just wondering if we might not be selling at a bit of a discount,” Allen said.

“If we had’ve done it in a few months time when the price of iron and coal go up again would we have got a better price?”

Mactier said that timing was everything in finance and that the deal had been discussed at various levels for more than 15 years.

“As they say, timing is everything but that was clearly one of the things the directors thought about,” Mactier said.

“We were going through our own internal review process and we expect benefits to come out of that but this is an opportunity that has been talked about and speculated about…Russell Tate is in the room, can tell you probably for at least 15 years.[

“We took a view looking at the position we  are in, but also the position of the businesses that we were acquiring and the significance of the opportunity to bring the two together and we are very comfortable that the transaction in front of us absolutely accelerates the opportunity that would have otherwise been in front of us.

“It really does future proof this business.”

He said that the size of the board was large beut beleieved that with WPP directors coming on board – including former Group M John Steedman and WPPs head of global planning, Jon Steel, the interests of STW shareholders still needed to be represented.

As part of the deal WPP has also guaranteed its stake in the business will be locked at 61.5%.

The merger will get formal approval later in the week and be finalised at the STW AGM in May.

Simon Canning


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