KKR set to acquire corporate PR firm from WPP for $800M

The proposed terms involve WPP selling its 50.5% stake in FGS Global for around $800 million.

WPP, the global advertising group, announces that it has finalised a deal to sell its majority stake in the financial communications firm FGS Global to Kite Bidco Inc., an entity controlled by investment funds managed or advised by private equity firm KKR (Kohlberg Kravis Roberts & Co) for approximately $800 million.

The proposed terms involve WPP selling its 50.5% stake in FGS Global for around $800 million, valuing the entire communications company at roughly $1.7 billion. This transaction would increase KKR's ownership from about 30% to approximately 80%, with the remaining shares held by the company's management and numerous partners.

FGS, created from the merger of London-based Finsbury, Frankfurt-based Hering Schuppener, and Washington DC-based Glover Park Group, operates nearly 30 offices globally and serves over 1,600 clients. Last year, the group generated approximately $450 million in revenue, with earnings before interest, tax, depreciation, and amortization (EBITDA) of about $95 million.

By acquiring FGS, KKR is wagering on the continued growth of the business, aiming to either sell it to a new buyer or take it public in the coming years. The deal is expected to strengthen WPP's financial position, which has faced scrutiny in recent months due to its relative underperformance compared to competitors like France’s Publicis.

The transaction is expected to close before the end of 2024, subject to regulatory approvals and other customary closing conditions. The transaction is a related party transaction, falling within UK Listing Rule 8.2.1R, due to KKR’s existing c.28% shareholding in FGS. The board of WPP (the “Board”), which has been so advised by Goldman Sachs International, acting in its capacity as sponsor, considers that the terms of the Transaction are fair and reasonable as far as WPP shareholders are concerned. In giving its advice, Goldman Sachs International has taken account of the Board’s commercial assessment of the Transaction. The Board considers the Transaction to be in the best interests of WPP shareholders as a whole.

Mark Read, CEO of WPP, said: “The sale of FGS represents an excellent outcome for WPP. Together with the management of FGS we have built a world-leading strategic communications and advisory group, creating considerable value for all stakeholders. 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.”

Alexander Geiser, global CEO of FGS, added, “Over the past four years, we have built one of the world’s leading strategic communications and advisory businesses from three independent consultancies and the addition of Sard Verbinnen. I would like to thank WPP for their help and long-standing collaboration in growing our firm. We are thrilled by the continued support of KKR, who also share our vision and strategy to be the leading advisor helping clients navigate the increasingly complex stakeholder economy. KKR’s exceptional investment track record, extensive experience and global resources will be invaluable as we further grow our integrated solutions globally as a standalone firm.”

Insiders noted that FGS had come to be viewed as non-core to WPP’s operations, particularly given the agency network's ownership of Burson, a PR firm, which includes BCW and Hill & Knowlton under the leadership of Corey duBrowa, former communications chief at Google. Other agencies within WPP, such as Ogilvy, also provide PR services.

Philipp Freise, partner and co-head of European Private Equity at KKR, stated: “Our investment in FGS reflects our strong commitment to strategic partnerships, where we provide long-term capital and global resources to entrepreneurial teams and world-class businesses. We strongly believe in FGS’s strategy and leadership and have been pleased with our partnership since our minority investment in July 2023. In today's increasingly complex stakeholder ecosystems, the value of FGS’s insight, advice and execution is increasingly essential for organisations to navigate uncertainty and achieve their goals. We look forward to continuing our collaboration and helping FGS realize their vision as a global category leader.”