WPP to merge Australian and NZ businesses with STW Communications

Media company WPP has agreed to merge its Australian and New Zealand businesses with marketing and communications business STW Communications Group and increase its shareholding from 23.6% to 61.5%.

WPP will sell its businesses to STW for an enterprise value of AUD512m, with consideration consisting of the issue to WPP of new STW shares and a shareholder loan.

WPP will then become the majority shareholder with a 61.5% equity interest and will also have the right to appoint a majority of directors to the STW board.

The merged group will have pro-forma last twelve months revenues of around AUD1bn and earnings before interest and taxes of AUD142m. It will become the primary vehicle for WPP in Australia and New Zealand.

“The merger continues WPP's strategy of investing in important geographic markets and to advance ‘horizontality' to ensure our people work together for the benefit of clients,” the company said.

The transaction is conditional on STW shareholder approval and the approval of the Australian Competition and Consumer Commission and the Foreign Investment Review board.