$2.5bn Acquisition Deal Offered By WPP With Chinese Tech Firms

Photo by JD Lasica from Flickr

A consortium of Chinese tech companies is in discussion to acquire a minority stake in the operations of  WPP, the FTSE ad giant, in China.

Reportedly, Tencent, Alibaba, and China Media Capital Holdings (CMC), a venture capital firm, are in the early stage of discussions to acquire approximately 20 percent of WPP China.

However, the discussions will potentially take several months to wrap up. Sky News reported that the consortium will possibly value the business between $2 billion (£1.52 billion) and $2.5 billion (£1.9 billion).

The said deal would see WPP pool its Chinese agency operations into a new holding firm, prior to the acquisition of the consortium of equal shareholdings in the new firm. WPP would retain overall control and ownership of the operations.

The potential collaboration between Tencent and Alibaba in acquiring stakes in WPP China as part of the same deal is interesting due to the intense rivalry which has ‎occurred between the two companies in recent years.

Reportedly, Roberto Quarta, the chairman and temporary boss of WPP, have travelled to China with Andrew Scott, another leading executive, to start negotiations on the said deal.

Sky News, however, added that the precarious nature of the negotiations indicated that the deal could still go through.

Last April, Sir Martin Sorrell, the long-term chief executive, stepped down from the company. The 33-year company veteran resigned after an investigation into his personal conduct was launched. Also, earlier this month he defeated WPP in an auction for MediaMonks, a Dutch digital agency. WPP is still looking for a successor to Sorrell.

WPP, the advertising titan, has only sold off one company, its stake in Globant, since the resignation of Sorrell, for a deal that amounted to £258 million.

Currently, the company is in the process of selling its £228 million stake in AppNexus, a digital ad exchange firm which is set to be acquired by AT&T.

WPP refused to release a comment on the story. Tencent and Alibaba could not be reached for comment.