Papers filed in connection with the upcoming vote by WPP shareholders on the pending Kantar transaction reveal that Bain has several exit strategy options down the road.
The private-equity firm will have the option under certain conditions to trigger an IPO for the research giant three years after the current deal closes.
That’s now expected to occur in early 2020.
The pending transaction specifies that Bain and WPP will operate Kantar as a 60%-40% (respectively) joint venture.
And if Bain does trigger the IPO option, WPP would have to go along, although the holding company could retain as much as 20% of Kantar (per certain conditions) if it so chooses.
Also after three years, Bain could choose to sell its stake in Kantar to a third party. Assuming Bain sells a majority stake to that third party, WPP could be required to sell all or part of its interest in Kantar as well, on the same terms as Bain sells.
Equity firms, of course, do need their payouts. I think we all know Bain isn’t doing this deal out of a deep love for media and market research. No, I’m pretty sure it has more to do with ROI.