Business
WPP to sell its majority stake in FGS Global
WPP to sell its majority stake in FGS Global.
About this update from Wpp Plc
[{"type":"text","content":"\n\n\n\n\n\nFOR IMMEDIATE RELEASE\n\n\n7 August 2024\n\n\n\n\n \nWPP plc (\"WPP\" or the \"Group\")\n \nWPP to sell its majority stake in FGS Global at an Enterprise Value of $1.7bn, unlocking significant value for its shareholders\n \nWPP plc (LSE/NYSE: WPP) today announces it has entered into an agreement to sell its entire majority stake in leading strategic communications and advisory firm, FGS Global (\"FGS\" or the \"Firm\"), to Kite Bidco Inc., an entity controlled by investment funds managed or advised by Kohlberg Kravis Roberts & Co. L.P. (\"KKR\") (the \"Transaction\"). KKR first made a minority investment in the Firm in July 2023.\n \nThe Transaction accelerates the value realisation for WPP from its strategic advisory businesses. This strategy started with the merger of Finsbury, The Glover Park Group and Hering Schuppener in 2021, the subsequent acquisition of Sard Verbinnen in 2021 and the introduction of KKR as a minority shareholder in 2023. Through these transactions, FGS has become a global leader in providing advice to the stakeholder economy with over 1,400 experts and over 1,600 clients.\n \nThis Transaction better positions WPP to focus on and invest in its world-class creative, media and corporate and consumer public relations businesses to deliver growth while strengthening the Group's balance sheet.\n \nThe consideration for the sale of WPP's c.50% stake at an Enterprise Value of $1.7bn (c.£1.3bn1) is $775m (£611m) ($707m (£557m) after tax) payable in cash at completion2. This represents an attractive valuation multiple to the 2023 EBITDA.\n \nThe total cash proceeds payable on completion of $767m (£604m)3 will be used to reduce WPP's leverage, implying pro-forma average net debt to EBITDA of c.1.60x4. WPP aims to continue to manage its debt within the targeted range of 1.5-1.75x average net debt to EBITDA, enabling it to invest in the growth of its businesses, pay dividends and return surplus capital to investors over time. The Transaction has no impact on WPP's current year or medium-term guidance and is expected to be broadly earnings neutral in 2025.\n \nThe Transaction is expected to close before the end of 2024, subject to regulatory approvals and other customary closing conditions. The Transaction is a related party transaction, falling within UK L...