WPP Eyes DAC To Strengthen Asian Portfolio

WPP is negotiating with Asatsu-DK Inc., Japan's third-largest ad shop, to buy its minority stake in digital ad shop Digital Advertising Consortium for an estimated $43 million, the companies have confirmed.

DAC, established in 1996, has estimated annual billings of approximately $1 billion. Consolidated net income in its last fiscal year was around $22 million.

If the deal goes through, it would be WPP's third transaction to buy all or part of an Asian ad firm in the past two months. Earlier, WPP signed an agreement to buy a majority stake in Campaigns & Grey in the Philippines, a shop in which it previously had a minority stake. In July, it purchased a majority in interest in India's Mindset Advertising.

WPP and other ad-holding companies are bulking up on their Asian-Pacific assets, given projected ad-spending growth in the region. Publicis Groupe's ZenithOptimedia recently predicted that the region's ad expenditures would grow 6% to $123 billion this year and surge another 8% in 2011 to $133 billion.



Other companies are targeting the region for acquisitions as well.

In July, Paris-based Havas acquired a majority stake in Host, Australia's largest independent ad agency. At around the same time, competing holding company Aegis bought part of TigerSpike, the mobile tech firm based in Sydney.

As for DAC, WPP cautioned that due diligence was still proceeding, and stumbling blocks to a purchase could arise. But the company appeared confident Tuesday that a deal would be reached, stating that it expects to "execute a legally binding definitive agreement" by the end of the week.

Last week, ADK confirmed selling off a smaller portion of its holdings in the digital shop for around $17 million.

If WPP completes the transaction it would have an ownership interest in the firm of just under 19%. The single-largest stakeholder in DAC is Hakuhodo DY Media Partners, with just over 45% of the firm.

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