WPP’s (LON:WPP) share price has fallen into the red in London this Tuesday, as the ad giant confirmed that it was in talks with Bain Capital for the sale of a majority shareholding in Kantar. The update comes amid an ongoing overhaul at the blue-chip company following the departure of founder Martin Sorrell over a complaint of misconduct.
As of 08:58 BST, WPP’s share price had given up 1.40 percent to 997.80p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.22 percent higher at 7,513.85 points.
WPP confirms Kantar talks
WPP announced in a statement last night that it had entered into exclusive discussions with Bain Capital for the sale of a majority shareholding in Kantar, with a headline enterprise value of about $4 billion. The ad giant said that Bain’s proposal was subject to negotiation, and that there was “no certainty that these discussions will result in a transaction involving Kantar”. WPP noted that the move was part of its previously announced process for the sale of a majority of the business.
Reuters noted in its coverage of the news that analysts have said that Kantar risks losing market share to more tech-savvy peers, while its business model is challenged by consumer goods companies developing their own data teams, rather than relying on surveys undertaken by external firms.
The news comes after WPP agreed the sale of its interest in sports, entertainment and communications group Chime, saying that the disposal was in line with its new strategy to focus on its main areas of business and simplify its operations through the disposal of non-core assets.
Analyst ratings update
Liberum Capital reaffirmed its ‘buy’ stance on the ad giant yesterday, with a target on the WPP share price of 1,450p. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 1,142.67p.