Thedarkkn1ght
03 Oct 2017
Accenture to bid for WPP? Publicis and WPP are takeover targets and Accenture 'looks a credible buyer', bank saysPublicis Groupe and WPP are takeover targets because agency groups are under pressure and Accenture looks the most credible buyer, according to a leading French bank"Accenture is a credible buyer," he said. "In view of its size ($90.4bn/£67.5bn) market capitalisation), it could acquire and easily integrate Publicis (€13.3bn/£11.7bn) or WPP (£17.5bn).He noted shares in Publicis have fallen 11% and WPP by 22% this year and are each trading near "all-time lows" on a multiple of around 11 times’ earnings, while Accenture’s shares are on a multiple of 20 times’ earnings."The valuation gap between Accenture and the advertising agencies has never been as great," he added, although he expects any buyer would have to pay "a premium of at least 30%".Read more at [link]
Thedarkkn1ght
03 Oct 2017
Re: Benefit for WPP? How many million shares does WPP own in ADK though?WPP has a 25% stake in ADK.ADK only has a 2% stake in WPP.If the sale goes through everyone is a winner.WPP's 25% stake will be sold at a high premium and a lot higher than the price it paid back in 1988. Potential capital return for shareholders.I don't see this as negative for WPP?See below********** ********** ********** ********** ********** ********** ********** ********** ********** ********** *****WPP has been handed a lucky exit from a Japanese jam. The British media group, which owns 25 percent of Asatsu-DK, reckons private equity firm Bain Capital’s 152 billion yen ($1.3 billion) offer for the Asian ad agency is stingy. But Martin Sorrell’s group is already a winner.WPP’s relationship with ADK dates back to 1998, when the groups exchanged equity stakes and agreed to set up joint ventures and cultivate advertising clients together. ADK, whose shares have underperformed local peers Dentsu and Hakuhodo in the past decade, wants out. The Japanese company says synergies from the tie-up failed to materialise, and it will now sell its WPP stake, worth 428 million pounds (64 billion yen). It backs Bain’s 3,660 yen per share offer and says the 1998 agreement obliges WPP to sell up.That’s unlikely for now. A source close to WPP told Reuters the bid significantly undervalues ADK, and other investors seem to agree: the Japanese group’s shares rose 4 percent above the offer price on Tuesday, implying the market expects a second, higher bid.But WPP is already a winner. Bain’s current offer secures Sorrell a price that is 26 percent higher than the one at which his company received shares in 1998. Throw in dividends, and the UK group’s total return is an annualised 4.4 percent, according to Eikon. That’s below its stated cost of capital of 6.4 percent last year, and excludes any taxes paid on dividends, but it’s not bad for an investment that has looked doomed for some time. Japan has suffered from disinflation and sluggish economic activity since the 1990s. As a result, ADK’s revenues have stagnated and its shares have traded below Bain’s offer price for almost a decade.The alternative is for WPP to hold onto its stake, if legal small print allows, and profit from Bain’s margin-boosting talents. The Japanese group’s operating margin was 10.9 percent last year. Had it matched Dentsu’s 21.1 percent, ADK’s operating profit would have been 94 percent, or 5.2 billion yen, higher. Either way, Bain will pull Sorrell out of a hole.[link]
LK Hyman
03 Oct 2017
Re: Benefit for WPP? Thedark,"Why is that bad news?It's bad news because ADK owns £430 million worth of WPP shares, which it wants to dump. That's a big overhang. WPP could, I suppose, avoid that by getting into a bidding war for ADK but, given that ADK has fallen out of love with the poison dwarf, that wouldn't bode well for the Japanese biznay if WPP won.LKH on the flybridge former WPP shareholder
Thedarkkn1ght
03 Oct 2017
Benefit for WPP? WPP owns 24.7% of Asatsu who has received a bid and is now trading at >20% the share price it was prior to the offer.WPP's own shares/stake is therefore worth 20% more.Why is that bad news?********** ********** ********** ********** ********** ********** ********** ********** ********** ********** ******Even before the divorce, WPP Plc is squeezing for more alimony. Shares in Japan's third biggest advertising agency Asatsu-DK Inc. soared as much as 20.5 percent Tuesday, the most on record, after Bain Capital LP offered to buy out the company for $1.3 billion.Asatsu-DK is trading at 3,810 yen ($33.68) per share, higher than Bain's 3,660 yen bid price. In other words, the market believes Bain will sweeten its offer. Asatsu-DK's largest shareholder, London-based WPP, the world's biggest advertising firm, has indicated Bain's offer is too low, according to people familiar with the matter.BAIN OFFER FOR ASATSU-DK$1.3 billionTraders in Tokyo are making the right bet. Currently, WPP owns 24.7 percent of Asatsu-DK. U.K.-based value fund Silchester International Investors LLP holds 17.2 percent, while Northern Trust Corp. and Franklin Resources Inc. have 9.2 percent and 7.1 percent respectively. So long as WPP has two of the three money managers in its camp, it has the majority vote and power to block any deal.[link]
LK Hyman
02 Oct 2017
Bain a bain for WPP Interesting to see Bain taking a pop at ADK, the number three Mad Men company in Japan. WPP owns 25% of ADK but the latter is trying to break the commercial relationship between the two companies, presumably as a result of a fall out.ADK has a sizeable stake in WPP, which it is intending to sell. Could put more downward pressure on the share price.LKH on the flybridge glad to be out of WPP
gamesinvestor
28 Sep 2017
Re: I'm out "now where to put the wonga?"LK -- you can big up on IMB after today's drop.I'm already at 4.97% of my wad and considering taking it over 5%Games
nimbo1
27 Sep 2017
Re: I'm out id hold onto the cash and wait for a bout of volatility to get a bargain - seems to be hitting a lot of stocks at the moment. yesterday i bought iqe for 108 - share price now 122! got to get a few lucky breaks to cover the losers : -)
Johandesilva
27 Sep 2017
Re: I'm out LK, buy the company with the results just out. The IT over spend is not a massive amount in comparison to cash flow and is much needed for the start of a massive shift in insurance companies for self-service over costly call centers and this company has already started to lay down the foundations while not exactly first to the party with Aviva "Quotemehappy" cutting out call-center... well they are ahead of the heard. The new chief is a nice honest guy and left Uber a long before implementing the plans to make them evil.
LK Hyman
27 Sep 2017
I'm out Well, having only recently joined the share register I got cold feet and bailed yesterday at £13.99.I fear that the pressures of big boys like Unilever and Procter & Gamble on their advertising and promotional budgets will hit WPP's margins even harder than the recent share price weakness allows for.WPP has been an incredible powerhouse in the recondite world of Mad Men but it's beginning to smell strongly of the likes of BTR ... a company that grew like topsy on the strength of using its high stock market rating to take over more lowly rated companies. However that can only last so long, and, now that WPP's own rating has fallen rather a lot, I don't see how the acquisition merry go round can carry on much longer despite the balance sheet being currently reasonably strong.Weakening or negative growth will put a spotlight on many of Sorrell's 400+ companies and I fear that many will be seen to be weak but there will be little or no opportunity to offload them to others in a reversal of the optimistic go-go days when the little guy was buying 'em.When sorrels come, they come not single spies, but in battalions ... as Shakespeare almost said.LKH on the flybridge now where to put the wonga?
nimbo1
27 Sep 2017
Re: problem thanks for the replies. I didn't mean to sound negative by the way, just doing some research while considering the apparent value on offer. Sorry I should have been more specific - as far as I can tell the future lies in in app advertising. (of course WPP know about online advertising they've been the masters for the past how ever many years). Will do some further digging. the threat to some traditional online advertising is from things like the below. [link]
Hardboy
26 Sep 2017
Re: problem They are (I believe) the biggest spender on on line advertising in the world. So if your reason for avoiding them is they've been left behind by a switch to on line, then it's probably not valid. (There may be plenty of other reasons of courser.)
Dogberto
26 Sep 2017
Re: problem WPP own 400+ companies, many of which offer mobile advertising services. they generate enough cash to be able to acquire further companies in this space when it starts growing further.
nimbo1
26 Sep 2017
problem WPP's problem is that they have been left behind by the rapid shift to online imo. Was thinking of a bargain buy here but think i'll leave it. The results from taptica this morning make an interesting comparison because their revenue is 91% mobile related. Ok much smaller company but grew by 27%...[link]
Johandesilva
20 Sep 2017
Re: Fibonacci Many would disagree as you need to know the fundamentals in order to make a call as to what line on Fibonacci is realistically possible.
Our Haven
19 Sep 2017
Re: Fibonacci Indeed
