All to play for

Last week 300 or so of WPP AUNZ’s top leaders attended a three-day offsite in which CEO Jens Monsees staked the first stage of his transformation programme as complete and stage two was now in play. 

Also in play, for late April, is a vote by WPP AUNZ’s minority shareholders to offload their shares to WPP global for 70 cents, putting an enterprise value on the business of circa $700 million.

There is still plenty of housekeeping to be completed, including a final recommendation from WPP AUNZ’s board-appointed “Independent Expert” – PwC – on whether the takeover offer should be accepted. But WPP AUNZ’s Independent Board Committee has all but greenlighted the offer. 

Most observers think the deal will proceed and possibly by mid-year WPP global will move from owning 61% of the Australian and New Zealand group to 100% control. 

It will have been a relatively short but adventurous four years under the current structure in which the old listed STW Group merged with WPP’s local assets. STW, once the offspring of adman John Singleton, was a ferociously Australian marketing services group that gave WPP mongrel and growth in this market and was an exception globally in how then CEO Sir Martin Sorrell structured the company.     

Sorrell swoop?

Hamish McLennan, a one-time Sorrell lieutenant, now chairman of Rugby Australia, REA Group and media outfit HT&E, says the deal is a no-brainer for WPP globally.

“What Martin Sorrell was trying to achieve, and it did work for many years, was in light of the fact that Australia is very parochial,” McClennan told Mi3. “He created a structure that delivered better control. Without really knowing the detail of where WPP is at I think [London] could create a deal structure that could benefit head office.”

But McLennan, who’s rarely shy of throwing curveballs, still argues consolidation among the big five global marketing services holding companies is coming – and suspects Sorrell and his new-world holding company S4 Capital, is eying WPP assets.  

“Consolidation is absolutely still going to happen,” said McLennan, who is also Deputy Chair of giant investment fund, Magellan. “I think at some point it’s going to happen. You’ve seen through Covid there is just enormous pressure on that model. It's all on the table. There will just be an inflection point for somebody who steps in and tries to carve them up. One of them will get taken over and set off consolidation.”

McLennan pointed to the rumblings late last year of private equity firm CVC holding talks with Publicis about a sale or transaction. 

Likewise, he thinks Sorrell has his eyes on some WPP assets. “Martin looks and feels very disciplined at the moment around S4 and he's reaping the benefit of it with S4’s share price. What I know about him, I'm sure there are parts of WPP or other holding companies that he would lust after.”

Rebellion quelled

For the Australian group, what becomes after WPP brings the antipodeans back from their long-held semi-autonomous status?

At last week’s offsite, the general line from Team Monsees was that the local and global transformation and strategic imperatives are closely aligned. And the heat that’s been steaming out of WPP here over Monsees leadership was down a few degrees on previous levels. Indeed, there are now growing rumblings about WPP AUNZ’s board and some of its decisions. But if the deal goes ahead, those noises will likely be buried.

Standby for minority shareholders in April. WPP Thunderbirds are nearly go.