WPP ups stake in STW Communications

stw logoSir Martin Sorrell’s WPP has picked up more shares in struggling STW Communications as rumours of a takeover bid from the world’s largest agency holding group continue to swirl.

A posting to the Australian Securities Exchange today showed WPP’s investment vehicle Cavendish Square Holdings has bought another 10 million shares taking its stake in the company to 23.65 per cent.

STW (ASX:SGN) controls agencies including Ikon Communications, Ogilvy, Tongue, The Brand Agency as well as J Walter Thompson and Mindshare which it jointly owns with WPP.Rumours of a takeover from WPP started swirling at the start of the year as it upped its stake in the group despite a disastrous 2014 on the stock market.

STW, which is Australia’s largest agency holding company, has struggled in recent times with its share price dropping from $1.21 last October to 70c today. In October 2013 it traded at $1.60.

At today’s price STW has a market capitalisation of around $317m, while WPP has a market capitalisation in excess of $30bn.

STW CEO: Connaghan

STW CEO: Connaghan

In June STW CEO Mike Connaghan outlined his plan to revive the fortunes of the company amid what he described as a bad run in new business wins from many of its larger agencies, which included chopping its number of brands from 80 to 50.

That followed from the decision to move the Moon Communications and Shift brands under the Ikon banner to create what it hoped would be a more competitive full-service agency offering.

It has also created a new bespoke full-service agency called Sibling to service the Westfield account.


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