ADK unmoved by WPP’s combative stance on Bain deal

ADK has issued a statement in response to recent criticism from WPP, making clear its intention to proceed with a sale to Bain Capital.

The Japanese advertising agency reiterated that its 20-year partnership with WPP had failed to yield “expected synergies” and noted that the industry has “changed significantly” since the agreement began. "ADK's management has made the painful but necessary decision to unwind a capital and business alliance that simply no longer makes sense," the statement noted.

WPP is ADK’s primary shareholder with a stake of nearly 25 percent. ADK has previously indicated that privatisation is the only way it can fulfil its goals of becoming a "digital first" company.

In a statement last week, WPP accused ADK of failing to act in shareholder interests by supporting Bain’s tender offer (see "ADK 'resisted opportunities', preferring 'disastrous' investments: WPP"). It also suggested that ADK was to blame for the partnership’s shortcomings.

ADK claimed to have approached multiple potential suitors before deciding Bain was the most “credible”. It said Bain’s offer was “heavily scrutinised” and has already increased since negotiations began. WPP and Silchester International Investors, ADK’s second-biggest shareholder, have said Bain’s offer undervalues ADK.

ADK said that under Japanese law, it has the right to terminate its agreement with WPP and as a result that WPP is obligated to sell its stake in ADK. Bain’s tender offer “will move forward for the benefit of all shareholders regardless of any objections by WPP to the termination or termination rights of the alliance,” the statement said.

ADK added that its own stake in WPP, which is worth about US$580 million (65 billion yen), has delivered a low return and exposes ADK “unnecessarily” to WPP’s performance. It said It hopes shareholders will see the sale as a chance to cash out “with a premium”.

Bain Capital’s offer will expire on 15 November.