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. Last Updated: 07/27/2016

Young & Rubicam Bought By Rival WPP for $4.7Bln




LONDON -- British advertising giant WPP Group PLC lifted the lid on its $4.7 billion agreed takeover of U.S. rival Young & Rubicam Inc. on Friday in a deal that will create the world's biggest advertising group.


Fleshing out an outline deal agreed earlier in the week, WPP said the deal would give its shareholders two-thirds of a new combined group and Y&R shareholders one-third in what is set to be one of the largest deals in advertising history.


As earlier agreed, Y&R shareholders will be offered 0.835 new WPP American Depositary Receipts or 4.175 new WPP ordinary shares for each Y&R share, valuing Y&R shares at $53 each for a total of $4.7 billion based on Thursday closing prices.


"This transaction creates a worldwide leader," said WPP CEO Martin Sorrell in a statement.


The takeover puts WPP at the top of the industry, ahead of U.S. heavyweights Omnicom and Interpublic, creating a group with pro forma 1999 revenues of $5.2 billion and earnings before interest and tax of $704 million.


WPP said the deal would create significant synergies with at least $30 million of cost savings identified to date. The London-based advertising group expects the takeover to be earnings accretive in the first full year.


After the close of the transaction - which is expected to be completed by fall - Thomas Bell will be named chairman of Young & Rubicam while Y&R finance director Mike Dolan will be named chief executive.


WPP said all of Y&R's senior operating heads had signed new employment contracts and senior executives at the New York-based agency had agreed not to sell two-thirds of their Y&R shares for one year.


After agreeing to the deal in principle, WPP and Y&R have been working around the clock this week to seek approval from big clients such as Ford and draw up fresh employment contracts for some 50 Y&R executives.