WPP Considering £500 Million Rights To Buy Grey
WPP is considering the possibility of a £500 million rights issue to purchase American advertising group, Grey Global.
Chief executive of WPP, Sir Martin Sorrell, said last week, he is looking at Grey’s books but did not confirm whether he would be making a bid for the last independent advertising network.
According to a report in the Sunday Times, the £500 million rights issue would be used to fund the purchase of Grey by WPP, if Sorrell decided to go ahead and bid for the group which is valued at about $1 billion.
However, Sorrell has previously told analysts that a bid for Grey could be absorbed by WPP without difficulty. He said: “It doesn’t move the needle at all. Grey, in the context of WPP, is not enormous.”
Although there are doubts about whether WPP will go-ahead with any bids, an industry analyst who took part in a conference with Sorrell on Friday said: “The market’s assumption is that he’ll buy it and there will be equity issued.”
At the conference, Sorrell announced that half-year revenues at WPP reached over £2 billion for the first time ever, spurred by a significant increase in advertising revenue (see Revenues At WPP Exceed Expectations To Reach £2 Billion).
While revenues at the world’s second largest advertising group, rose from January to June by 6% year-on-year to £2.03 billion, stimulated by the effects of Euro 2004, the Olympic Games and the US presidential elections.
Others that have previously expressed an interest in Grey include French advertising group Havas, plus private equity firms Providence Equity Partners, Blackstone Group and Hellman & Friedman (see New Bidder Emerges For Grey Global).
Grey Global: www.grey.com
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