WPP Turmoil May Put Kantar Into Play, Nielsen Most Likely Suitor

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The turmoil in the C-suite of WPP could put one of the world’s best research and data organizations — Kantar — into play, according to informed speculation from knowledgeable stock-market analysts following the agency and research holding company.

The speculation stems from reports of improprieties by WPP Chairman Martin Sorrell. He has been the primary architect for the formidable research assets in WPP’s portfolio, although some investors would like to see it divested in order to free up cash and focus the company on its core advertising and media-buying services.

“One outcome of the investigation may be to bring closer a sale of WPP’s Data Management (i.e., Market Research) unit, which Sir Martin has been a keen supporter of keeping, but where there has been questioning of why WPP retains the asset, given the issues in the market research area,” the equities research team at Liberum write in a note sent to investors this morning.

Noting that the marketing and media research division generates about 15% of net sales and profits for WPP, they speculated it would yield a 10x multiple that would reap about $4.91 billion if sold.

They speculate that the most logical acquirer, not surprisingly, is Kantar’s No. 1 competitor, Nielsen — which would no doubt raise antitrust issues.

Kantar competes with Nielsen in audience measurement, vis-a-vis its joint venture with comScore in Rentrak, and also notably in the competitive ad-spending and media-buying intelligence business.

“Sir Martin has been a very firm supporter of WPP retaining the assets, stating that it gives WPP a unique advantage over its other agency holding peers who do not have such significant exposure to the area,” the analysts note.

“However, there have been persistent questions from the market as to whether WPP should exit the business, given its perennial underperformance at the top line vs. the group average, the wider secular concerns on market research and mixed evidence on whether it has boosted top-line growth in other areas.

“We are not sure that whoever succeeds Sir Martin would be as a firm supporter of retaining ownership.”

 

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