WCRS being tipped for early sell-off or possible flotation

LONDON – The near £15m buyout of advertising agency WCRS from French parent Havas in April has been tailored towards an early sell-off or a possible flotation of the London agency.

According to industry newsletter Marketing Services Financial Intelligence, the business has been pre-packaged with a sell-off in mind, which will happen, it predicts, within the next two years with a sale seen as more likely than a flotation of the standalone agency business.

If the WCRS management team, which completed the buyout from Havas in April, does not float or sell, it may have a sale forced upon it by the French advertising holding firm and other shareholders in the business.

Havas sold 24.9% of the agency for £14.25m to a 23-strong WCRS management team alongside Robin Wight and his returning co-founder Peter Scott, plus a group of outside investors that include merger brokers LongAcre Partners and public relations entrepreneur Matthew Freud and his associates.

Bob Willott, editor of Marketing Services Financial Intelligence, said: "Pressure is sure to build for cashing in their investments if the business prospers."

WCRS is certainly prospering. The month following the MBO, the agency won Manor Bakeries' £3m Mr Kipling advertising account followed by the whole of the £38m 3 mobile phone business out of TBWA\London without a pitch.

It also launched the latest phase of its highly successful campaign for directory enquiry service 118 118 as its moustachioed runners transformed into jump-suited 1970s crime fighters.

According to Willott, the freedom of the management team to decide the future destiny of the company is dependent on its ability to repay some £3.25m of debt due to Havas as part of the buyout deal, plus a further £3m at the time of sale or flotation.

Provided the debt is repaid, the management will be able to sell the company if the majority of shareholders agree.

"Such a move would almost certainly sever the residual link with the Havas-owned Arnold Worldwide network represented by the 24.9% shareholding it retains," Willott said.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.

Topics