Asatsu-DK (ADK) has announced that it supports a tender offer launched by Bain Capital that could see it becoming privatised and delisted from the Tokyo Stock Exchange.
Bain Capital announced the move to the market this week, stating its intention to buy all of ADK’s shares from existing holders, including its biggest shareholder WPP. The offer stands at 3,660 yen a share, which Reuters places at a 15.4% premium over Monday’s close and a valuation of 152bn yen ($1.35bn).
For ADK, the release from a public listing will allow it to make faster decisions as it won’t be beholden to its strategic partnership with WPP. In a statement, ADK said the WPP deal, made almost 20 years ago, “has since played less of a strategic role in the company’s ongoing development, and has not materially contributed to the profits of the business”.
President and Group chief executive officer of ADK, Shinichi Ueno, commented: “In collaboration with Bain Capital, we will set a course towards bold structural reforms and growth strategies that will help us to enhance our competitiveness and to expand our market share, both in Japan and overseas. Furthermore, this new partnership will open access to a broader network of strategic partners, enabling ADK to build on its success in markets across Asia and elsewhere in the world. We are confident that this transaction is in the best interests of all our stakeholders.”
A key part of the deal is about ADK being able to partner with a wider network of businesses, something that it hadn’t been able to while being beholden to partner with mostly WPP businesses.
David Gross-Loh, a managing director at Bain Capital Private Equity, said: “This is a positive outcome for current shareholders to realize attractive value. The business has significant potential for growth that it has been unable to realize due to constraints that have weighed down on ADK’s return on equity for years. Privatisation of the business would lift these constraints and provide the financial and strategic flexibility the company needs to succeed in a new digital environment. We look forward to partnering with the ADK management team who endorses this offer.”
The move comes as WPP itself has posted a dip in its latest revenues and sales, with WPP boss Sir Martin Sorrell blaming slower client spending and short term investment strategies, as well as calling out the industry for unsustainable new business practices.