WPP has hit back at its long-term Japanese partner’s defence of a planned sale to Bain Capital, in a statement that questions whether board members at Japan’s third largest advertising agency have prioritised their own future over the interests of the business.
Sir Martin Sorrell’s advertising group on Thursday reiterated its view that the tender offer “significantly undervalues” ADK, after the Japanese agency on Monday published a document responding to questions about the Bain deal.
“Have the board ever considered or discussed any alternative bona fideoffers 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?” the WPP statement asked.
“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?”
The UK agency said ADK’s management had “consistently resisted opportunities to improve the performance of its overseas operations . . . preferring to invest in disastrous acquisitions and consolidations such as Gonzo and Bungeisha, the costs of which have not been fully exposed”.
ADK had said that while its alliance with WPP — which included cross-shareholdings as well as a business partnership — had “initially provided a certain level of results”, a “concrete plan for collaboration” that contributed to both groups’ interests had not been attained, and there had been no “business synergy that expands mutual interests” as originally intended.
The Japanese firm added that it had differing views from the British group on changes to the advertising industry and that it had become “difficult to make swift and flexible decisions” in that environment. Instead, it had decided to move to an open network with a range of different partners.
WPP said ADK had “improperly attempted” to terminate the groups’ agreement, “which it knows full well that it cannot do”, and that the effective sale by ADK of its holding in WPP “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”.
ADK did not immediately respond to a request for comment. Bain could not immediately be reached for comment.