The world's largest advertising agency, WPP, has lashed out at private equity giant Bain Capital saying its offer to buy ADK “significantly undervalues” the company.
WPP owns just under 25 per cent of Japan's Tokyo-listed ADK, and is unhappy with Bain's tender offer – which is supported by ADK's board – to take the company private for just over £1bn.
The offer, of ¥3,660 (£24.81) per share, was a premium of 15.1 per cent to the ¥3,180 price which ADK was trading at before the deal. FTSE 100-listed WPP's share price slipped 0.15 per cent in morning trading.
“Have the board ever considered or discussed any alternative bona fide offers or proposals for the company which may be of greater benefit to the stakeholders?” said a WPP spokesperson in a statement. “Or has the only consideration been management’s concern about their own position in the future?”
The WPP statement went on to call for ADK's management to disclose any reassurances they had been given by Bain Capital regarding their own position in the future.
It complained that ADK had resisted opportunities to improve performance, “preferring to invest in disastrous acquisitions and consolidations”, and sold off other assets “at a lower price than WPP's indication”.
But ADK's chief executive, Shinichi Ueno, argued: “In collaboration with Bain Capital, we will set a course towards bold structural reforms and growth strategies that will help us to enhance our competitiveness and to expand our market share, both in Japan and overseas.”
The relationship between ADK and WPP appears to be souring rapidly. On the same day that ADK endorsed Bain's offer, it terminated its almost 20-year partnership with WPP saying that a “concrete plan” which benefitted both companies had not been attained.
ADK added the companies differed on their “views on the mid-to-long-term business strategy”.
Without the support of WPP, Bain could be hard-pressed to meet the 50.1 per cent threshold of shareholder acceptance which it needs for the deal to go ahead.
Bain has not had the easiest few months in its dealings with listed companies. Earlier this year, it was forced to up its offer for Germany drugs company Stada after activist investor Elliott claimed the long-fought deal undervalued Stada.
But Bain's interest does seem to have been sparked by Japan, a traditionally quieter market for private equity, as just last month the firm bought Toshiba's chips unit in a £13bn deal after a drawn-out auction process.