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After the break-up: what WPP and Kantar could look like without each other

By Keith Hunt

October 26, 2018 | 4 min read

While it’s been on the cards for some time, WPP’s announcement that it is looking to dispose of a big chunk of Kantar is still significant.

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Under Sir Martin Sorrell, WPP had a policy of not disposing of acquired businesses – after all, in putting an asset on the market you’re suggesting it might not have been the right strategy all along. Such an admission was never WPP’s style – it was also a question of personal pride.

New chief executive Mark Read is free from such shackles and can make the big changes that should have happened a long time ago. Despite the headlines, he’s probably relishing the opportunity to put the house in order.

Yet there is a danger that once you dispose of a big asset like Kantar, you are opening the floodgates for much more to be sold off, both by WPP and potentially the other networks.

And WPP has always made a play of being the biggest global marcomms network. The more you ramp up your disposal strategy the more you undermine that positioning and potentially your influence on the world stage. Through Sorrell, WPP spoke on behalf of UK Plc; his and the business’s views truly counted.

So what of Kantar?

Its natural home is with one of the networks, but that’s not going to happen. Then again, one of the management consultancies might make a play for it as a way of buying a big slice of traditional marcomms action. Consultants traditionally do a lot of research-type work, so there would be a logic in such an acquisition. But that said, WPP is making the disposal doubly hard by retaining a stake in the business meaning that any acquirer will never have full autonomy to do what they want with it.

Another option might be for Kantar to be sold eventually to a PE house but only if the price is right. Currently it’s anyone’s guess where it might end up. Limbo of this kind damages confidence in a business, especially when it’s an asset as large as Kantar – the onus will be to free up that cash as fast as possibly to invest elsewhere.

That cash can be used to grow organically or to buy in businesses that are much more in line with the strategy that Read has outlined. Let’s not presume for one moment that WPP is out of the acquisition game, but only time will tell what Read and his board will be setting their sights on.

Crystal ball gazing is a dangerous game, but if we look at where there’s been a large influx of cash into our industry, of note is private equity. We’ve seen the creation and growth of a number of PE-backed groups in the last few years and the nature of such businesses means there’s always an exit on the horizon.

And let’s not forget that WPP bought Taylor Nelson, a listed company back in 2008, so we can’t discount listed businesses being part of any future acquisition strategy.

But the obvious hot properties are of course the data analytics, AI and technology firms. We are seeing brands shift their investments towards more focused one to one communications that deliver a tailored message at scale and at pace. So any business with that expertise is going to be very much in demand and will command a good price. We could well see Sorrell's S4 and WPP going head to head for such businesses in the future!

One thing is for sure, the minute you think there is some sense of continuity in our industry it’s only a question of time before the world order is turned on its head.

Keith Hunt is managing partner at Results International


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