WPP Is Really Not Happy with Bain Capital’s Bid Price for Asatsu-DK

By Erik Oster Comment

Earlier this week, Bain Capital Private Equity filed a tender with the Tokyo Stock Exchange to acquire the common shares of Japan’s third largest agency by market share, Asatsu-DK, for around $1.35 billion.

It soon became apparent the deal might see a few bumps in the road.

While the offer represents a 15-25 percent “premium over recent trading level,” according to Bain Capital, Bloomberg reported that holding company WPP, Asatsu-DK’s top shareholder, was “quick to object” to the offer as too low. The second-highest shareholder in the agency at around 17.3 percent, London-based Silchester International Investors LLP, also objected to the offer.

In a very bitchy press release that went live yesterday, Silchester claimed the “current offer price substantially undervalues” the agency and that it is “not convinced” that Asatsu-DK’s board members “have made significant or sufficient endeavours to find other buyers.”

“ADK’s Board seems to be unhappy with its shareholders and has looked for an owner they would prefer,” the release continues. “This is round the wrong way — when a Board loses the confidence of its shareholders, it is the Board that should resign.”

It goes on to claim that “ADK rushed through a sale of WPP shares” at a time when the holding company’s “valuation is depressed” and that “The sale was done without prior consultation and without shareholder approval.”

According to the press release, there is a “significant risk of litigation if ADK and WPP cannot successfully dissolve their 20 year partnership.”

Silchester also encourages any other prospective buyers of the agency to come forward, adding that it will “consider any higher offer…on its merits.”

Expect more back-and-forth to come.

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