Looks like there is a battle brewing between Bain Capital and WPP over a $1.3 billion tender offer Bain is about to make for a big Japanese agency that WPP has a nearly 25% stake in — ADK.
The proposed offer values the agency — the third-largest in Japan behind Dentsu and Hakuhodo — at about a 15% premium over its current market value.
But sources familiar with the situation say WPP, which has been a partner in the agency for nearly 20 years, believes the offer significantly undervalues the ADK assets. WPP declined to comment.
ADK management is backing the offer and intends to unwind its relationship with WPP. The alliance was created in 1998 when both firms invested in each other.
ADK said Monday it will sell its 30-plus million shares of WPP.
ADK believes it hasn’t realized enough value from its relationship with WPP, and the two sides can’t agree on a strategy going forward. In a statement issued Monday, that agency said after reviewing the matter, it has concluded “privatization represents the best option for the company to position itself for sustainable future growth.”
Whether WPP has enough leverage to derail the proposal or force Bain to increase its offer remains to be seen. Bain needs just 50.1% of ADK shares to accept the offer in order for it to go through.
Still, with a one-quarter stake in the firm, WPP could make things difficult for a Bain-controlled ADK in future.
The tender offer, scheduled to launch tomorrow, follows a Bain-led deal earlier this month to acquire the memory-chip division of Toshiba, another Japanese firm. That transaction is valued at $18 billion.