WPP’s global parent lobs takeover bid amid ‘challenging environment’
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WPP Australia/New Zealand’s (ASX:WPP) time on the ASX could be limited, following a takeover offer by its global parent company.
The London-based WPP Plc has lobbed a bid to acquire all the shares in WPP AUNZ it doesn’t already own, for 55c.
That marks a premium of 34.1 per cent to WPP’s closing price on Friday, sending shares in the company up by the same amount in morning trade today.
Shares in WPP traded at around 60c in early March before collapsing to 20c in the post-Covid selloff.
The listed Australian division said the offer from its global parent marked a “compelling proposition” for minority shareholders.
WPP Plc was founded by Sir Martin Worrell in 1985, who built it into the largest media and advertising company in the world before leaving on bad terms in 2018.
In discussing the offer, WPP’s Plc said shareholders would likely benefit from an up-front cash payment at a material premium.
That compares favourably with the risks associated with a fluctuating share price and uncertain dividend outlook in “the current challenging operating environment”, the company said.
The global parent is already a majority shareholder in WPP AUNZ with a 61.5 per cent stake.
The company said that while its Aussie subsidiary has a portfolio of leading brands, “we are mindful of the weak trading conditions currently impacting WPP AUNZ”.
In that context, it said the current structure leaves it more limited in its capacity to deploy resources in the region.
“We believe that we are best able to support WPP AUNZ in maximising its potential by moving to 100% ownership,” WPP Plc said.
WPP Plc said it plans to engage the transaction via a formal takeover offer, but would also be open to implementing a scheme of arrangement “if pursued expeditiously”.
In addition, it may adjust the takeover price to offer WPP AUNZ’s minority shareholders a fully-franked special dividend as part of the deal.
A successful takeover means WPP AUNZ would be absorbed into the parent group, resulting in its delisting from the ASX.