WPP profits rise; Scali talks continue By Kevin McCormac

NEW YORK--WPP Group PLC said that it has received a "revised offer for Scali, McCabe, Sloves" as it reported its results for the fiscal year ended Dec. 31.

Reliable sources said the “revised offer” for SMS referred to continued interest in Scali from Interpublic’s Lowe Group. WPP and Interpublic (IPG) have been negotiating the sale of SMS for some time. One observer said that the two sides have moved closer to striking a deal, which some estimated could be worth $70-75 million, although that figure is disputed. One source claimed that IPG had begun the process of due diligence, indicating a purchase was close. But an IPG executive would not confirm that negotiations had entered that phase.
WPP posted .an 18.6% increase in operating profits to $70.76 million and showed a 40%. gain in profits before taxes and exceptional items to $94.9 million this year as compared to last. The holding company also announced a rights issue to raise $126 million that, along with certain “asset disposals,” will be used to pay down WPP’s $150-million bridge loan facility.
Analysts were encouraged by WPP’s results, particularly its revenue growth of 5.6% to $2.25 billion. “It’s an encouraging sign in that it suggests the businesses are okay,” said Hoare Govett analyst David Grimbley.
According to WPP, J. Walter Thompson saw 1992 revenues increasing 11% over 1991 levels, making it the engine of the company. Revenues at Ogilvy & Mather were “marginally ahead” of 1991 while troubled Hill & KnowIron saw its revenues fall 14%.
According to WPP, its year-end net debt has been reduced to $363 million from the $625 million it had been at the end of 1991. The company also announced that it hopes to resume dividend payments on ordinary shares this year.
Copyright Adweek L.P. (1993)