WPP has agreed to sell its stake in ADK to Bain Capital for the original price of 3,660 yen (US$33) per share.
The development comes after prolonged wrangling in which WPP had argued that Bain’s offer undervalued ADK. Earlier this month, WPP initiated legal proceedings to contest ADK’s moves to end a 20-year partnership between the two companies. Later WPP said it would increase its stake in ADK if the Bain bid were dropped.
It is not fully clear why WPP has backtracked on what has been a consistently combative position towards Bain’s takeover bid, and WPP has yet to respond to Campaign's request for comment. However, it appears likely that WPP and Bain reached an understanding based on the possibility of future collaboration that could prove beneficial to WPP. A statement issued by Bain following initial coverage of WPP's move says:
"In the event that Bain Capital is able to take ADK private, Bain Capital will discuss with WPP a potential investment by WPP as a non-controlling minority shareholder in a Bain Capital investment vehicle that directly or indirectly owns the interests of ADK. Any future cooperation will be discussed in good faith by both parties."
In the statement, Bain managing director David Gross-Loh said his company was pleased at the "orderly termination of the current alliance" between ADK and WPP.
As a result of the agreement, the tender offer, which was due to expire today, has been extended until 6 December. To take control of ADK, Bain requires 50.1% of investors in the Japanese company to sell their shareholdings. Silchester International Investors, ADK’s second largest shareholder, and Hong Kong-based Oasis, have also voiced opposition to Bain’s takeover bid.
This article has been updated to take into account Bain Capital's statement on its agreement with WPP.