KKR’s FGS deal hangs on more bad corporate news

FTI Consulting

07/08/2024 12:21

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Karen Kwok
       LONDON, Aug 7 (Reuters Breakingviews) - The buyout group
is taking control of the financial communication company from
WPP. At 15 times 2024 EBITDA, the $1.7 bln valuation is rich but
below peer FTI Consulting. For the bet to pay off, CEOs will
have to face more major crises that require the PR firm’s pricey
counsel.
        
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    CONTEXT NEWS
    British advertising group WPP is selling its controlling
stake in financial PR agency FGS Global to minority shareholder
KKR for $775 million in cash, which it will use to reduce debt,
the company said on Aug. 7. 
    The sale of the roughly 50% stake gives FGS Global an
enterprise value of $1.7 billion, WPP said. The deal will
increase KKR's stake in FGS Global to about 80% from 30%. The
private equity firm acquired about 30% of FGS Global in 2023.
That deal valued the PR firm at $1.5 billion. 
    WPP, the owner of agencies Ogilvy and GroupM, announced the
deal on Aug. 7 alongside first-half results that showed another
slowdown in underlying revenue growth and a downgrade in its
full-year expectations.
    Shares of WPP were down 1.2% at 0814 GMT on Aug. 7. 

 (Editing by Francesco Guerrera and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  KWOK/ 
karen.kwok@thomsonreuters.com))