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Private equity group KKR has approached WPP over taking majority control of financial communications firm FGS Global, according to people with direct knowledge of the discussions.
The approach, which took place in the past few months, was rejected by WPP, the UK-listed advertising group that owns about a 55 per cent stake in FGS, the people said.
KKR already owns about a 30 per cent stake in FGS after striking a deal last year that valued the business at $1.43bn. The remainder of the shares are owned by FGS partners and employees.
KKR’s recent offer for an increased stake valued FGS at higher than the 2023 deal but was still dismissed for being too low, some of the people added.
KKR could return with a higher offer, according to two of the people close to the talks, while another described the situation as a “price negotiation”. Another added that the WPP board did not consider FGS as “for sale” but would be “mindful of the fiduciary responsibility”.
KKR’s investment in FGS is led by its co-head of European private equity Philipp Freise. Goldman Sachs is the retained adviser for WPP on its transactions.
WPP, KKR and management have been working on a plan to float FGS in the next two years, they added. WPP, KKR and FGS declined to comment.
The situation underscores how WPP suffers from a conglomerate discount, whereby its £8bn London stock market valuation is worth less than the sum of its many operating businesses. Other units of WPP include public relations firm Burson, and advertising businesses GroupM and Ogilvy. It also has a stake in market research company Kantar. Owning a majority stake in FGS has allowed WPP to consolidate its accounts.
Separately, WPP has also reviewed this year whether to sell its 40 per cent stake in Kantar, which is seen by its board as a financial investment rather than a strategic part of the group.
FGS is a strategic advisory and communications consultancy with close to 30 offices around the world serving more than 1,600 clients. It was formed through the merger of three communications and lobbying companies controlled by UK-listed WPP: London-based Finsbury, Frankfurt-based Hering Schuppener and US Glover Park Group. The group then acquired Sard Verbinnen.
The group generated about $450mn last year in revenue, according to people close to the group, and more than $90mn in earnings before interest, tax, depreciation and amortisation.
The talk comes amid a recent flurry of private equity-backed dealmaking in the communications and PR sector. Tulchan Communications was sold to Teneo, the global advisory firm part-owned by CVC, while Powerscourt was sold to Morrow Sodali, a communications and investor relations firm backed by private equity group TPG.
PPHC, the bipartisan US public affairs group, this month acquired London-based Pagefield, a communications group founded by lobbyist Mark Gallagher.
WPP owns a number of other global communications firms. Earlier this year, it merged BCW and Hill & Knowlton to create a new firm called Burson, led by Corey duBrowa, former communications chief at Google. It also runs a PR business through its Ogilvy advertising agency.
