WPP Agrees Deal to Sell Majority Stake in FGS Global For $1.7bn

Advertising giant WPP (LON: WPP) announced the sale of its majority stake in strategic communications firm FGS Global in a press release Monday.

The company said it will sell its stake in FGS to investment firm KKR for a substantial $1.7 billion. WPP shares are down more than 2% on Wednesday following the news.

The deal marks a strategic pivot for WPP, allowing the company to concentrate on its core competencies in creative, media, and corporate public relations.

FGS Global, a powerhouse in strategic communications and advisory services, was formed through the high-profile merger of Finsbury, The Glover Park Group, and Hering Schuppener in 2021.

The company has rapidly expanded its global footprint, boasting a client base of over 1,600 and a team of over 1,400 experts. KKR initially made a minority investment in FGS Global in 2023, recognising the firm's potential.

The sale of WPP’s majority stake is expected to generate $775 million in cash, which the company plans to use to reduce its debt levels. While the transaction is anticipated to have no impact on WPP's current year or medium-term guidance and is expected to be broadly earnings neutral in 2025., it positions the company for future growth and investment in its core businesses.

WPP CEO Mark Read expressed satisfaction with the deal, emphasising the significant value created for shareholders and the opportunity to focus on core business growth.

“The sale of FGS represents an excellent outcome for WPP,” sais Read. “We have achieved an attractive price, enabling WPP to accelerate the crystallisation of the significant value created. This also provides WPP with greater financial and management flexibility as we continue to grow our core business including Burson and Ogilvy Public Relations which give our clients access to world-class public relations services.”

The transaction is expected to close before the end of 2024.