Advertising giant WPP is set to sell 60 per cent of its stake in analytics division Kantar to a private equity house as it raises cash for a turnaround strategy.
Bain Capital has agreed to snap up the stake in a deal that hands Kantar a $4bn (£3.2bn) valuation.
WPP will net $3.1bn from the sale after tax and continuing investment, and said it will use 60 per cent of the money to slash net debt.
The media conglomerate is targeting the low end of a net debt range of 1.5 to 1.75 times core earnings for 2020.
Shareholders will receive the rest of the cash.
WPP is attempting to revamp operations under new boss Mark Read after a series of profit warnings and the departure of its former chief executive Martin Sorrell.
“This transaction creates value for WPP shareholders and further simplifies our company,” Read said today.
“With a much stronger balance sheet and a return of approximately eight per cent of our current market value to shareholders planned, we are making good progress with our transformation.”
Bain Capital managing director Luca Bassi added: “We see many opportunities for expansion and will invest in technology to expand the company’s capabilities and reinforce its global leading position.”
Read said the deal would slightly dilute headline earnings per share in 2020.
Apollo and CVC were two other private equity giants that had submitted bids for Kantar, according to Reuters.
WPP launched the business back in 1992. Kantar now analyses customer and consumer views across 100 countries.
WPP is simplifying its sprawling set of divisions, having sold off TV post-production firm The Farm Group to Los Angeles-based Picture Shop.
The firm recently revealed a steep decline in first quarter underlying sales in the US as it lost big clients such as Ford.
Main image credit: WPP