Marketing and communications firm WPP Scangroup is planning to sell its business in South Africa and wind up several dormant units, coming months after it sold its operations in Nigeria.
The firm announced in a Tuesday notice that the closure and dissolution of certain subsidiaries and disposal of business and assets of certain subsidiaries will optimise operations.
WPP said it will sell its entire business and assets of South Africa’s Hill + Knowlton Strategies SA Pty Ltd to BCW Africa Pty Limited, a Johannesburg-headquartered marketing and communications firm. The value of the deal was not disclosed.
“This is a strategic move to divest the business operations in South Africa after an analysis of market dynamics and growth opportunities and the company’s decision to strategically reallocate resources towards our primary markets, enhancing our core business operations and, therefore, contributing to long-term success,” said WPP in the notice.
The announcement came alongside the release of WPP’s financials for the financial year ended December 2023, showing it posted a Sh130.1 million profit, emerging from a net loss of Sh145.5 million in the prior year.
The sale will leave HK South Africa as a non-operating subsidiary, which WPP plans to wind up alongside other various dormant subsidiaries across the company’s markets across Africa.
The firm has registered entities in other countries, including Ghana, Rwanda, Zambia, Malawi, Mauritius, Mozambique, Uganda and Gabon.
WPP had in mid-October last year announced it was going to sell its Hill + Knowlton Strategies Nigeria, the subsidiary in the West African country, to Lagos-based Skot Public Relations Limited.
The firm said on Tuesday the transaction has been completed and it will proceed to wind up the non-operating entity.
The firm has been scaling down its business and changing the corporate structure into what it termed as a “leaner, more simpler [sic] and efficient structure,” that will enable it to focus on core business areas.
“It [the restructuring] is also intended to minimise operational and compliance costs and obligations while maintaining service delivery in strategic markets,” said the firm.
WPP in July 2019 announced it was going to sell 60 percent of its stake in global data research firm Kantar to Boston-based private equity firm Bain Capital.
The firm said the latest profit was helped by Sh210.1 million booked as other gains and it relates to the Kantar deal.
“Profit after tax for the group amounted to Sh130 million compared to a restated loss after tax of Sh146 million in 2022. This was mainly driven by capital gains related to a deferred purchase consideration for the sale of Kantar which was previously held for legal contingencies,” said WPP.
The firm said it expects modest growth in 2024 “as we work through the full-year impact of the 2023 client losses in Scanad”.
It said the impact of these losses will be tapered by growth in technology-backed products and expected organic growth from both Ogilvy, GroupM and H&K Kenya.
