Overview:
On July 12, Bain Capital acquired 60% of Kantar – a global research, consulting and analytics firm – for a valuation of c.$4bn. Kantar was owned agency giant WPP, which will continue to hold the rest 40% in the company.
Bain Capital is expected to bolster the growth of Kantar through further investments in technology, people and inorganic growth.
About Kantar:
Headquartered in London, Kantar, is one of the world’s leading data, research, consulting and analytics companies, and operates in over 100 countries, with more than 30,000 employees.
Kantar’s clientele includes over half of the Fortune 500 companies, national governments, media owners and small businesses.
In April this year, the company unified all its brands, such as Millward Brown, TNS and Worldpanel, under a single “Kantar” brand.
Transaction overview :
Bain Capital’s acquisition of 60% of Kantar creates a strong partnership with WPP to accelerate the development of Kantar. In 2018, Kantar generated c.$3.2bn revenue with an EBITDA margin of c.15% and operating margin of c.8.6%.
Transaction multiple: Valuation is c.1.25x 2018 revenue and 8.2x EBITDA. §WPP will use the proceeds from the transaction to reduce c.$1.9bn in debt – the agency is targeting 1.5-1.75x net debt to EBITDA by 2020. The rest of the proceeds will be return to WPP’s shareholders. The transaction is expected to be 5-6% dilutive to WPP’s EPS in 2020 and marginally dilutive in 2021.
WPP’s share price rose marginally post the announcement of this transaction.
Blurring of lines between agency and technology businesses:
With increasing digital spend from large enterprises, B2B and B2C marketing has become more technology driven, with the likes of Accenture and Infosys eroding into the market share of traditional agencies.
There is significant convergence between agencies and technology companies:
Accenture has acquired a number of agencies such as Droga 5, Karmarama, The Monkeys, Fjord and Rothco.
Infosys acquired Wongdoody
ProKarma acquired Lenati
On the other hand, Dentsu – the large Japanese agency – recently acquired Salesforce.com consulting companies DEG and Davanti.