WPP has agreed to sell a majority stake of its market research company Kantar to private equity firm Bain Capital.
The agency holding company confirmed on Friday that it has reached an agreement to sell 60% of Kantar to Bain as part of chief executive Mark Read's strategy to reduce debt and simplify the structure of the company.
The deal values Kantar at $4 billion. Proceeds to WPP on completion after tax and continuing investment in Kantar are expected to be about $3.1 billion, the group said.
WPP said it will use 60% of the net proceeds to reduce debt and expects to return circa $1.2 billion of the proceeds to shareholders.
According to reports, Bain entered into exclusive talks for Kantar last week after beating rival companies Apollo Global Management, Platinum Equity and Vista Equity Partners.
In a release announcing the deal, Read said the sale "creates value for WPP shareholders and further simplifies our company."
"Kantar is a great business, and we look forward to working with Bain Capital to unlock its full potential," he said. "As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth, while our clients continue to benefit from its services and capabilities."
Luca Bassi, a managing director at Bain, said the firm sees "many opportunities for expansion" in Kantar.
"We will invest in technology to expand the company’s capabilities and reinforce its global leading position," he added.
Another Bain managing director, Christophe Jacobs van Merlen, said the firm has "confidence" that it can grow Kantar "both organically and by acquisition."
Kantar chief executive Eric Salama said the new ownership structure "presents a great opportunity for Kantar, our employees and our clients."
"In Bain Capital, we have a partner who shares our ambition, brings relevant expertise and – with WPP – can help us accelerate our growth and impact for clients," he added. "We are focused on delivering ‘human understanding at scale and speed’ and the ‘best of Kantar’ more consistently. We will do so by investing more in talent and by becoming a more technology-driven solutions provider."
The sale is subject to approval by WPP shareholders and other customary regulatory and legal approvals.
Bain was advised by Canson Capital Partners, Credit Suisse and Mediobanca.