WPP AUNZ set to pocket $150 million from Kantar sale
WPP AUNZ has decided to sell 100% of its interests in the data, insights and consulting company Kantar, in a bid to “further simplify and reposition the business for growth”. The sale will see WPP AUNZ pocket approximately $150m in cash, after transaction costs and provision for restructure liabilities to the value of $8.4m.
Completion of the transaction is expected to be in early calendar year 2020 and is subject to approval by non-WPP associated shareholders and completion of the WPP global deal.
WPP AUNZ chairman Robert Mactier said the move was an attractive one for shareholders.
“Subsequent to the announcement by WPP plc that it has entered into an agreement to sell a 60% stake in the global Kantar business, a committee of independent WPP AUNZ board directors has determined that to participate in the global transaction is an attractive strategic and financial outcome for the company and our shareholders,” said Mactier.
“As a result, WPP AUNZ has now agreed to sell 100% of its interests in the Kantar businesses in Australia and New Zealand as part of the global transaction. The independent directors of WPP AUNZ believe the sale will further simplify and reposition WPP AUNZ for growth. Importantly, it creates balance sheet flexibility by reducing debt to below target leverage and provides WPP AUNZ with capacity to return funds to shareholders through dividends or capital management.
“In addition, it provides increased capacity to take advantage of opportunities in line with the strategic plan to be developed by incoming CEO Jens Monsees, who commences with WPP AUNZ on 1 October 2019,” Mactier said.
The sale by WPP AUNZ values Kantar’s Australian business at $168m, based on the same EBITDA (earnings before interest, tax, depreciation and amortisation) multiple of 8.2x Kantar’s 2019 budgeted EBITDA used in the global sale. The sale will lead to an estimated one off non-cash accounting loss of $50m, reflective of the difference between the carrying value of the investment and the net sale proceeds.
Interim CEO of WPP AUNZ, John Steedman, said the sale would allow WPP’s portfolio of companies to accelerate their growth.
“The sale proceeds will enable greater investment in the existing portfolio of companies to accelerate their growth potential and invest in new offerings and technologies that better serve customer needs. We expect to retain a close relationship with Kantar and work together, as we do now, to create better integrated solutions for our clients, particularly as our major shareholder, WPP plc, will continue to own 40% of the global Kantar business.”
Gearing levels, potential expansion, capital needs and cashflow outlook are the main considerations ahead of the decision on what will be done with the proceeds of the sale, with leverage expected to be below WPP AUNZ’s targeted gearing ratio following the completion. This could see funds returned to shareholders, and the form of the return will be communicated to shareholders in due course.
