WPP, co-founded by advertising legend Martin Sorrell in 1985, plans to use the proceeds from this sale to pay down debt, fund dividends to shareholders, and reinvest in its core businesses, including communications agencies Burson and Ogilvy.
WPP to sell its majority stake in FGS Global : Background on FGS Global
FGS Global was formed in 2020 through the merger of London-based Finsbury, German Hering Schuppener, and Washington, D.C.-based The Glover Park Group. A subsequent merger with Sard Verbinnen & Co. was announced a year later, solidifying its position in the global public relations landscape.
Ashwin Pillay, a senior associate at law firm Charles Russell Speechlys LLP, highlighted the sector’s appeal, stating, “The wider communications sector is of increasing interest to strategic investors because of its resilient growth, compared with lower deal volumes in other industries. If the sector continues to grow and FGS can effectively utilize the benefits of industry consolidation and access to KKR’s network and resources, KKR will be optimistic about achieving a decent profit on exit.”
Market Reaction
Goldman Sachs International serves as WPP’s sole financial adviser on the transaction. Shares in WPP, listed on the FTSE 100 index of the London Stock Exchange, were trading at 696.40 pence ($8.85) on Wednesday afternoon, down 2.9% from 717 pence at Tuesday’s close.
Conclusion
The sale of WPP’s majority stake in FGS Global to KKR marks a significant move in the public relations industry, reflecting strategic shifts and growth opportunities. With KKR’s backing, FGS Global is well-positioned to leverage its expertise and continue its upward trajectory in the sector.
