Global communications firm WPP on Monday announced it will increase its stake in ScanGroup to 50.1 per cent in cash and share deal.
The London-listed firm currently owns 31.3 per cent and said it would acquire 95.7 million shares of ScanGroup through the creation of 21.3 million new stocks that are equivalent to 33.6 per cent of the Nairobi bourse-listed company.
It will offer cash for the 21.3 million shares at Sh85.85 amounting to Sh1.8 billion and cede ownership in nine subsidiaries to ScanGroup in exchange for 72.7 million shares. This values the deal at Sh8.21 billion and values ScanGroup at Sh24.44 billion.
WPP, also known Cavendish BV, jointly owns the subsidiaries in east and West Africa including Ogilvy Tanzania, Ogilvy Kenya, and Hill & Knowlton East Africa.
“Cavendish (WPP investment vehicle) therefore has effective control of ScanGroup,” said a statement by the multinational. “Cavendish does not intend to make a takeover of ScanGroup.”
The law states that any shareholder with a stake above 25 per cent of a firm listed at the Nairobi Securities Exchange (NSE) must declare if it plans a complete takeover should it acquire more than five per cent of the company.
At Sh85.85, WPP has offered a 33.1 per cent premium of ScanGroup’s Monday’s closing price of Sh64.5, which has shed 16 per cent over the past year.
The statement from WPP did not indicate whether top shareholders will cede some shares or the 72.7 million shares were created and have been issued, which will dilute the ownership of ScanGroup’s current shareholders.
WPP acquired a 27.5 per cent in ScanGroup in 2008 for Sh1.3 billion.
In 2011, it increased its direct stake to 29 per cent after it acquired 10 million shares from Andrew White — the creative director of Scangroup — after the expiry of the lock in period.
Mr White becomes the second executive in ScanGroup to reduce his interest after Koome Mwambia, the former chief executive of Ogilvy East Africa Ltd and Bharat Thakrar, the CEO of Scangroup.
Cavendish said Mr Thakrar has committed to remain a shareholder, director and employee of ScanGroup. Mr White currently owns 4.2 per cent of the firm while Mr Thakrar has 18.1 per cent stake.
The two are the founders of ScanGroup and they were both barred from selling their shares by the regulator.