Advertising giant WPP PLC (LSE:WPP) fetched a good price in its $1.7 billion disposal of strategic communications and advisory firm FGS Global, reckon Citi analysts.
The price tag came comfortably above FGS’s implied $1.4 billion valuation when WPP sold a partial stake to KKR in April 2023. It also exceeds Citi’s own sum-on-the-part valuation of $1.5 billion.
“We see the use of proceeds to reduce leverage as helping the risk profile of the overall group,” said Citi, adding: “We don't see any strategic dis-synergy from selling the asset even if it is delivering robust growth and very handsome margins.”
WPP has been forced into cost-saving measures amid a sharp fall in advertising budgets among its blue-chip client roster.
In yesterday’s interim results, the group disclosed that 3,000 jobs were cut in the period, which helped to bolster profits by 38% to £423 million on a much-improved 5.9% margin (compared to 4.2% in half-year 2023).