WPP has switched up its strategy in its ongoing battle with its agency partner in Japan, ADK, and has now offered to up its stake in the agency to 33% (from about 25% now) under certain conditions. It also said it would be willing to take a more active management role to help the agency achieve future growth and higher value.
The offer from the holding company comes amid a fight over a $1.3 billion tender offer to take ADK private by Bain Capital.
WPP and a number of other big investors in the agency oppose the deal, contending that it significantly undervalues ADK.
ADK and WPP have an alliance that dates back nearly two decades, in which the two firms have ownership stakes in each other. ADK has taken the position that the alliance agreement allows it to exercise a clause allowing it to unwind the alliance by selling its shares in WPP and which would also force the holding company to sell it shares in ADK.
WPP disputes that interpretation and two weeks ago took legal action against the agency in Japan. The holding company lodged a petition for a preliminary injunction with the Tokyo District Court seeking a declaration that ADK’s attempt to terminate its alliance with WPP is invalid.
In a statement issued late Wednesday evening WPP indicated that it “been approached by other stakeholders, both shareowners and management in ADK, to clarify our commitment to ADK if the [Bain] Tender Offer, supported by the ADK Board as the only future for their company, fails.”
Bain indicated earlier that it would cancel the offer if at least 50.1% of shares were not tendered. The tender offer was initially set to expire on November 15, but Bain recently extended it until later in the month.
In its statement yesterday, WPP added that it would “welcome the opportunity to engage constructively with the Board of ADK if the Tender Offer fails, to help ensure ADK has the talent and focus on digital and animation capability needed to increase the value of ADK for the benefit of all long-term stakeholders. With the approval of the Board and other shareowners we would also be prepared, as requested by some shareowners, to increase our shareholding in ADK to 33%.”
Bain has maintained that its tender offer is “fully valued.” Neither it nor ADK had responded to WPP’s latest statement by the time of this posting.