WPP considers £500m rights deal to finance Grey bid
By Gordon MacMillan,, brandrepublic.com, Monday, 23 August 2004 08:30AM
LONDON - WPP Group is considering a £500m rights issue to fund a possible bid for Grey Global after Sir Martin Sorrell said last week that buying the US advertising firm would not affect WPP adversely.
WPP is looking over Grey's books and although Sorrell has stopped short of saying his British ad group will make a bid, he hit back at Morgan Stanley, which said it believed the acquisition of Grey would not help WPP achieve its long-term goals.
On Friday he said: "It doesn't move the needle at all. Grey, in the context of WPP, is not enormous."
A £500m rights issue would be used to fund the acquisition if WPP did launch a bid for the last remaining independent US ad group, according to a report in The Observer.
Grey is expected to attract a price tag of around £700m although that could rise if a bidding war breaks out for Grey, which is being auctioned off.
Although Morgan Stanley doubts whether WPP will launch a bid, others are convinced it will. One industry analyst told the paper that the "market's assumption" was that Sorrell would bid and his bid would "be equity issued".
WPP reported pre-tax profits of £234.7m on Friday as revenues climbed 6% to a record £2bn on the back of adspend linked to the Olympics, Euro 2004 and the US presidential elections.
The only concern in the City is the possibility of a bidding war if Havas and private equity firms all decided to make a play for Grey.
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This article was first published on brandrepublic.com
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