UK-based advertising group WPP PLC (GB:WPP) is all set to sell its 50.5% stake in communications company FGS Global to the U.S.-based private equity (PE) firm KKR & Co. (KKR). The company also released its interim results for 2024, highlighting uncertain macroeconomic conditions for the full year. WPP shares opened lower by 1.73% as of writing.
WPP is the world’s largest advertising company, offering services like advertising, public relations, technology, communications, and more.
More About WPP’s Sale to KKR
WPP has signed an agreement with Kite Bidco Inc., a firm controlled by KKR, for the deal. With FGS Global’s enterprise value at £1.3 billion, WPP’s sale of around 50% stake will be valued at £611 million or £557 million after tax, payable in cash after the deal’s completion. The deal is expected to close by the end of 2024, dependent upon regulatory approvals.
With this deal, WPP aims to focus on top-tier creative, media, and public relations businesses while achieving financial flexibility.
Highlights from WPP’s H1 Results
In the first half, WPP’s revenue grew by 0.1% on a reported basis and 2.6% on an LFL (like-for-like) basis to £7.23 billion compared to H1 2023. In addition, the company reported a headline operating profit of £646 million for H1, with the operating margin of 11.5% increasing by 0.1 percentage points on an LFL basis.
Among its regions, India outshined with an LFL revenue growth of 9.1% in the second quarter. This offset the decline of 24.2% in China within Asian markets.
Speaking of WPP’s sectors, the technology client sector stabilized with a 1.0% decline in LFL growth for Q2, as compared to a decline of 9.0% in Q1. Additionally, the company’s top ten clients increased by 2.5% in the first half.
Moving forward, the company revised its full-year LFL guidance to -1% to 0%, while it expects an improvement of 20 to 40 basis points in its headline operating margin.
What Is the Price Target for WPP?
Based on the analyst consensus from TipRanks, WPP stock has received a Moderate Buy rating, supported by six Buy, two Hold, and two Sell recommendations. The WPP share price forecast is 933.75p, which indicates a growth of 31.7% from the current level.
