WPP: Bain Capital offer ‘significantly undervalues’ ADK

WPP has issued a public rebuke to the Japanese advertising agency ADK following the news of its attempt at privatisation through a deal with Bain Capital.

The world’s largest advertising company, which  has held a 25 percent stake in ADK for 20 years, accused Bain of “significantly undervaluing” the agency’s share price.

At the same time, the company said the agency was “improperly attempt[ing] to terminate its co-operation and business alliance agreement with WPP” despite “knowing full well that it cannot”.

Sir Martin Sorrell’s company goes argued that the move goes against shareholder advice and would trigger “damaging” tax charges and cancel promised dividends.

The statement follows the news last week that Bain Capital intended to buy ADK’s shares from all its existing holders, of which the biggest is WPP, for 3,660 yen a share – or US$33. Completion of the deal would see ADK privatised and delisted from the Tokyo Stock Exchange.

The statement from WPP reads in full:

“WPP reiterates that the tender offer significantly undervalues ADK, as other shareholders have subsequently stated both publicly and privately.

“Secondly, have the board ever considered or discussed any alternative bona fide offers or proposals for the company which may be of greater benefit to the stakeholders in the business including its clients and its people or has the only consideration been management’s concern about their own position in the future? Has Bain Capital ever given ADK’s management reassurance about their own position as part of this transaction and, if so, should not those terms be disclosed?

“Thirdly, ADK’s management have consistently resisted opportunities to improve the performance of its overseas operations and exploration of significant digital opportunities, preferring to invest in disastrous acquisitions and consolidations such as Gonzo and Bungeisha, the costs of which have not been fully exposed, along with the disposal of DAC in 2011 at a lower price than WPP’s indication and the reduction of ADK’s stake in Video Research Interactive. 

“Finally, ADK has improperly attempted to terminate its co-operation and business alliance agreement with WPP, which it knows full well that it cannot do, as on previous occasions it had abided with this instruction.

“ADK’s effective sale of its holding in WPP has attempted to circumvent the stock purchase agreement and contradicts explicit advice from key shareholders that doing so would trigger damaging and ill-advised tax charges. Others have also noted the cancellation of dividends promised on August 17 2017.”

WPP’s stake in ADK is said to be worth US$290 million. At the same time, ADK also holds a 2.4 percent stake in WPP worth US$576 million.

Earlier this week, president and group chief executive officer of ADK Shinichi Ueno said the Bain deal would allow the agency to expand its market share, both in Japan and overseas.

He added: “Furthermore, this new partnership will open access to a broader network of strategic partners, enabling ADK to build on its success in markets across Asia and elsewhere in the world. We are confident that this transaction is in the best interests of all our stakeholders.”

ADK has been contacted for further comment.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella Asia newsletter now.



Sign up to our free daily update to get the latest in media and marketing