Bain Capital’s extension of its tender offer to buy ADK is unrelated to WPP’s litigation and is “purely to satisfy regulatory requirements”, according to a statement from the private-equity company.
The initial tender offer was due to expire on 15 November, but will now run until 21 November. The offer stands at the equivalent of US$1.3 billion, or 3,660 yen per share.
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While WPP is apparently angling for a more favourable offer, Bain’s managing director David Gross-Loh said in the statement that Bain is “confident that our offer represents a fair and full valuation of ADK’s business. Moreover, given a rival bid has not surfaced and WPP has indicated their intent to terminate the business alliance with ADK, we believe that a competing tender offer is unlikely to emerge at all”.
Bain’s statement says WPP’s legal proceedings, which it launched last week, have no bearing on the tender offer. WPP is contesting that ADK’s handling of the tender offer renders the cooperation and alliance agreement (CAA) between the two companies invalid, meaning that WPP is not obliged to sell its stake in the Japanese company.
Gross-Loh's comments suggest that advertising agencies are likely to become more regular targets for private equity firms. “The global advertising industry is undergoing significant change and the traditional business model is in crisis,” he noted, reiterating that privatisation is the only way for ADK to become more “nimble”.
WPP’s own business is under pressure due to spending cuts by major clients and the continued expansion of tech giants such as Google and Facebook in the field of advertising. The company has forecast flat growth for 2017.