Advertising giant WPP’s (WPP) woes continue. It has now emerged that a partner Japanese agency is looking to break ties with the company by entering private equity ownership. Its shares fall 2% to £13.65.
The management of Japan’s third largest ad agency ADK are supporting a $1.3bn bid from Bain Capital partly to break a 19-year tie-up with WPP which owns a 24.7% stake in the business.
The UK-listed firm could be negatively impacted if the deal goes through as it loses a strategically important relationship in the world’s third largest economy. There could also be a loss of revenue from ADK which would be free to look past WPP agencies for future projects.
Source: WPP
According to WPP’s latest annual report it derived revenue of $600m from Japan in 2016. In the context of total revenue of more than £14bn this potential setback should therefore be kept in perspective.
Source: WPP
Recent research from Liberum rated the stock a ‘buy’ with a price target of £18.65.
