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WPP sells majority stake in FGS Global to KKR as group growth flounders

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TMT Reporter

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Read departs after more a 30-year stint at the London-listed advertising group, of which seven were in the top job.
Read departs after more a 30-year stint at the London-listed advertising group, of which seven were in the top job.

WPP has divested its majority stake in communications firm FGS Global to private equity powerhouse KKR in a deal valued at $1.7bn (£1.3bn).

WPP said the sale of its approximately 50 per cent stake at an enterprise value of $1.7bn (c.£1.3bn) would give it $775m (£611m). It has generated total post-tax cash proceeds of around £604m for WPP.

It said proceeds from the sale would be used to reduce debt, as well as to fund dividends and investment in its core businesses across advertising, public relations, media, and market research.

The transaction is expected to conclude by the end of 2024, pending regulatory approvals.

Shares fell two per cent following the news on Wednesday.

Mark Read, chief executive of WPP, described the sale of FGS as an “excellent outcome” for the company. “We have achieved an attractive price, enabling WPP to accelerate the crystallisation of the significant value created,” he said.

“This also provides WPP with greater financial and management flexibility as we continue to grow our core business including Burson and Ogilvy Public Relations which give our clients access to world-class public relations services,” Read added.

Philipp Freise, partner and co-head of European private equity at KKR, said: “We strongly believe in FGS’s strategy and leadership and have been pleased with our partnership since our minority investment in July 2023.”

WPP also reported its interim results in a separate announcement.

The advertising giant reported like-for-like revenue growth of 2.6 per cent or 0.1 per cent on a reported basis to £7.2bn.

The company posted an operating profit of £423m in the first half of 2024, up from £306m in the same period last year.

While its North American operations returned to growth in the second quarter, challenges in China and its project-based businesses, alongside an “uncertain” macroeconomic environment, have tempered full-year expectations.

The company noted a 2.5 per cent growth among its top ten clients and secured new business with major names such as Astrazeneca, Colgate-Palmolive, Johnson & Johnson, and the government of Canada.

It maintained its interim dividend at 15p per share.