ADK management offers support to Bain buyout bid

In a statement, ADK said that its management had settled on Bain’s offer of JPY3,660 per share as the most credible proposal, having approached multiple potential financial and strategic partners. The company added that it had asked independent advisors to assess the bid and that no deal protection mechanisms have been agreed in favor of Bain.

The statement was issued in response to a release from WPP, in which the London-based company said Bain’s offer significantly undervalues ADK and that ADK is improperly attempting to end its business alliance with WPP. In addition, it accused ADK of failing to improve its overseas operations and explore opportunities in digital media and of resisting WPP’s attempts to improve their alliance.

WPP owns a 24.9% stake in ADK, and according to the terms of their agreement, the Japanese company has the right to request WPP to sell its stake. Following the request, WPP must either sell the shares to a third party at a price designated by ADK within 180 days or sell them on the open market within a year. ADK also plans to sell its 2.4% stake in WPP.

ADK is Japan’s third-largest advertising agency by market share, with clients across multiple sectors. According to its most recent annual report, the company recorded revenue of JPY353 billion for the year ended December 2016, up from JPY352 billion the year before. Over the same period, net profit fell from JPY5.6 billion to JPY2.6 billion.

Following the acquisition, Bain plans to delist ADK. The company is looking to make significant changes to its business model and sees privatization as the best way to provide needed financial and strategic flexibility.

Bain is an active investor in Japan: in addition to the ADK deal, the firm is currently involved in the carve-out of Japanese conglomerate Toshiba’s Nand flash memory unit. Last month Toshiba agreed to a Bain-led consortium’s offer to acquire the unit for JPY2 trillion.

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• Topics
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