WPP eyes controlling stake in Ogilvy Kenya

It will also relegate ScanGroup to a minority investor in the companies that have public relations, media buying, and advertising wings.

The Nairobi bourse listed company acquired 50 per cent of Ogilvy East Africa in a cash and share transaction worth Sh234 million in 2010, as well as a 51 per cent share in Ogilvy Africa for $2.3 million (Sh193 million).

WPP had majority stake in the two companies before the ScanGroup purchase.

READ: Scangroup executive sells shares worth Sh420m to WPP

“Scangroup has granted call options to the other shareholder to purchase one per cent of the issued share capital at any time after December 31, 2014 at fair value calculated on multiple of earnings,” says the company in its latest annual report.

“Scangroup has granted call options to the other shareholder to purchase two per cent of the issued share capital at any time after 31 December 2014 at fair value calculated on multiple of earnings,” added the notice.

Owns half of Ogilvy Africa

Presently, WPP Group owns nearly half of Ogilvy Africa and 50 per cent of Ogilvy East Africa through its subsidiary Russell Square Holdings, which is based in the Netherlands.

“This was part of the 2010 transactions and I believe WPP will only exercise their options if the Ogilvy brand is not being run well post-merger,” Mr Manish Shah, the finance director of ScanGroup, told the Business Daily in a phone interview on Friday.

WPP Group directly owns 29 per cent of Scangroup and another 2.26 per cent through Ogilvy South Africa that has a 4.53 per cent ownership in the media services company.

The multinational communication firm, which bought a 27.5 per cent stake in ScanGroup in 2008, increased its direct holding to 29 per cent in December after it acquired 10 million shares from Andrew White—the creative director of the Kenyan company. The deal was worth at least Sh420 million.

The firm’s share stood at Sh52.50 at the close of trading Friday and has gained 32 per cent in the past three months. Its net profit rose 42.3 per cent last year to Sh911 million.