WPP bets The Farm on Read’s post-Sorrell blueprint
The Emmy Award-winning post-production agency which works on The X Factor and The Grand Tour has been put up for sale by WPP Group as the marketing services giant prepares to flesh out its strategy for the era after Sir Martin Sorrell, its former boss.
Sky News has learnt that WPP has engaged advisers to sell its controlling stake in The Farm Group, one of London’s top independent TV agencies, after two decades as its principal backer.
A deal is likely to include the sale of WPP’s 75% stake as well as the remaining shares owned by its two founders, Nicky Sargent and Vikki Dunn.
Industry sources said on Friday that The Farm had already drawn “substantial” interest from other players in the sector.
A sale, which could command a price tag of about £50m, would not be material to WPP, the FTSE-100 group behind famous advertising agency networks such as Ogilvy & Mather.
It would, however, represent another small step towards efforts by Mark Read, its new chief executive, to begin reshaping the company after a tumultuous year dominated by events surrounding the departure of his predecessor.
Mr Read, a long-serving WPP executive, has already presided over the sale of a number of other assets and signalled plans to offload a majority stake in Kantar, its market research arm.
He is due to set out next week further details of his strategic plans and long-term financial targets for the business.
The company’s shares have performed poorly this year – falling by a third in the last quarter alone – partly as a consequence of long-term shifts in advertising spending which had begun to exert downward pressure on WPP’s value well before Sir Martin resigned in controversial circumstances in April.
The 73 year-old, who built and ran WPP for more than three decades, has since set up S4 Capital, which he has said is an attempt to create a ‘next-generation’ marketing services group fit for an age when clients’ demands are driven by digital and data-led activities.
This week, S4 announced a merger with Mighty Hive, a US-based agency, following its earlier purchase of MediaMonks, which specialises in digital marketing communications.
Speaking to Sky News’ Ian King Live programme on Wednesday, Sir Martin described the acquisitions as representing a 2-0 scoreline for S4 against WPP, although his former employer is understood not to have lodged any offer for Mighty Hive.
Mr Read’s presentation next week is expected to include a one-off restructuring charge of several hundred million pounds, and possibly as much as £350m.
Analysts at Morgan Stanley predicted this week that WPP could also announce a cost-savings target of up to £500m, which would equate to a 7500 reduction in the company’s 134,000-strong workforce.
Sources close to WPP said on Friday that the decision to sell The Farm reflected a recognition that it was not core to the group’s business and would be more valuable under different ownership.
WPP, which has hired Cavendish Corporate Finance to handle the sale process, declined to comment.