David Blecken
Oct 2, 2017

Bain Capital aims to buy ADK as agency seeks transformation

The private equity firm plans to buy the Japanese ad giant in a move that spells the end of a 20-year partnership with WPP.

Bain Capital aims to buy ADK as agency seeks transformation

Bain Capital plans to buy ADK, Japan’s third-largest advertising agency group, outright for 152 billion yen, or US$1.35 billion. The official announcement follows an initial story published by the Nikkei on 2 October.

In a statement, ADK said it supports Bain’s offer of a tender, which would result in the privitisation of the company and see it delisted from the Tokyo Stock Exchange.

Completion of the deal would also mean the end of ADK’s partnership with WPP, which has been in effect since 1998. WPP holds a 24.96 percent stake in the company.

In its statement, ADK said the alliance “yielded positive results in the early years” but has lost its strategic importance and “has not materially contributed to the profits of the business”.

ADK has been working to grow its business internationally in recent years, with mixed results. It points to the need to transform into a “nimble and dynamic mixed media business”, which essentially means moving away from its focus on TV media to be “digital first”.

See all our followup coverage of the ADK-WPP fight over Bain's bid

Bain has invested in a number of companies in Japan, most recently buying Toshiba’s chip unit for $18 billion. ADK cites Bain’s “deep market knowledge and local and global networks” as important assets. According to the statement, the prospective partnership “will equip ADK with the financial flexibility and strategic expertise it needs to invest in core areas of growth, particularly digital, content and its overseas business”.

Commenting on the development, Greg Paull, principal of industry consultancy R3, said: “ADK was always going to be WPP’s gateway into something more significant in Japan, but despite everyone’s best efforts, it never proved a powerful enough platform.

“With Dentsu’s moves on Aegis and Hakuhodo’s partnership with Daiko and Yomiko, ADK was left in a game of catchup with no clear path to success.”

Paull added: "This frees ADK from the ongoing transparency of a public business with quarterly reporting and gives them more opportunities to make bigger bets with longer-term investments."

Campaign Japan

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