WPP sells its majority stake in FGS Global
WPP has sold its majority stake in leading communications and advisory firm FGS Global to private equity powerhouse KKR in a deal valued at $1.7 billion.
WPP, the owner of agencies Ogilvy and GroupM, announced the sale of its approximately 50% stake in a statement on Wednesday.
The cash transaction will reduce its debt so WPP can ‘focus on and invest in its world-class creative, media and corporate and consumer public relations businesses to deliver growth’.
The sale generated $775 million in cash, and WPP shares dropped by 2% following the announcement.
WPP CEO Mark Read said: “Together with the management of FGS, we have built a world-leading strategic communications and advisory group, creating considerable value for all stakeholders.
“We have achieved an attractive price, enabling WPP to accelerate the crystallisation of the significant value created.”
FGS Global CEO Alexander Geiser thanked WPP for its help and long-standing collaboration in growing the firm.
“We are thrilled by the continued support of KKR, who also share our vision and strategy to be the leading advisor helping clients navigate the increasingly complex stakeholder economy.”
KKR partner Philipp Freise added: “Our investment in FGS reflects our strong commitment to strategic partnerships, where we provide long-term capital and global resources to entrepreneurial teams and world-class businesses.”
Amidst the sale, WPP announced underwhelming interim results, reporting a 2.6% increase in like-for-like revenue or a 0.1% rise on a reported basis, bringing the total to £7.2 billion.
Meanwhile, operating profit reached £423 million for the first half of 2024, compared to £306 million during the same period last year.
Read said he is very pleased with the progress in the past six months, particularly the company’s investment in AI, the creation of VML and Burson, and the simplification of GroupM.
“We are strengthening our offer for clients while building a more efficient company,” he said.
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