By Pamela Barbaglia and Kate Holton
LONDON (Reuters) – WPP has attracted at least five of the world’s biggest private equity firms into an auction for a majority stake in its data analytics unit Kantar ahead of a deadline for indicative bids on Apr. 17, sources told Reuters.
U.S. private equity funds Bain Capital and Apollo are putting the finishing touches to their rival bids and will compete with European funds CVC Capital Partners, Permira and Apax.
The bidding field includes two other private equity investors, one of the sources said, without naming them.
Bain Capital and Permira declined to comment while Apollo, CVC and Apax were not immediately available.
The auction – led by Goldman Sachs – is gaining momentum as the deadline for first round bids looms.
But private equity investors, who have been reviewing the business in recent weeks, are taking a conservative approach to valuation.
Bids are expected to value Kantar at single digit multiples as the unit has suffered a decline in revenues in recent years, the sources said.
Kantar is likely to fetch a multiple of seven to nine times its earnings before interest, tax, depreciation and amortisation (EBITDA) of $550 million, one of the sources said.
If successful, WPP would fetch a top range price in excess of 3.5 billion pounds, the source said, cautioning that the final price could change after in-depth due diligence takes place.
WPP boss Mark Read aims to complete the sale by the end of the summer as he needs cash to steer WPP back to growth.
Read took the helm of WPP last year, pledging to spend 300 million pounds to restructure the group and bring it back in line with peers by the end of 2021.
Kantar provides brand and marketing communications research for some of the world’s largest advertisers.
But the impact of disruptive technologies and competition from the likes of Google and Apple has affected both Kantar and its owner WPP.
Kantar’s underlying sales slipped 2 percent last year to 2.6 billion pounds with operating profits down 14 percent to 301 million.
(Reporting By Pamela Barbaglia; Editing by Keith Weir)