WPP close to agreeing sale of majority stake in The Farm

Advertising giant WPP is close to agreeing the sale of a majority stake in The Farm to US rival Picture Shop, according to people briefed in the situation.

An agreement could be announced as soon as this week, one person said.

The Farm provides post-production services to programme makers and has prospered as companies such as Amazon and Netflix pour money into new content. Its last accounts, for the year to December 2017, show a pre-tax profit of £2.2m on revenue of £28m.

WPP first acquired the stake over 15 years ago, but it is no longer considered core. The group, one of the largest agencies in the world, is in the midst of a revamp following the departure last year of founder and chief executive Martin Sorrell.

Sir Martin’s successor Mark Read has embarked on a strategy of simplifying the group to focus on traditional communications, a commerce business that helps brands increase their presence on Amazon and Alibaba, experience-based marketing and marketing technology.

Earlier this year, it said it would merge VML with Young & Rubicam as well as Wunderman with J Walter Thompson, and would close 80 offices worldwide with the loss of more than 3,000 jobs.

It has also put its market research business Kantar up for sale and last month it emerged that PR grandee Roland Rudd had approached WPP about buying out Finsbury, the agency he founded.

The Farm, founded in 1998, is thought to be worth about £50m, according to the Sunday Times, which first reported the involvement of Picture Shop. WPP declined to comment.

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It is not clear whether the 25 per cent held by founders Nicky Sargent and Vikki Dunn forms part of the transaction. Ms Sargent told Broadcast magazine last year that it was looking to replace WPP as its major shareholder and that it, rather than the advertising titan, had engaged boutique M&A advisers Cavendish Corporate Finance to find a new backer.

However, she also said at the time that the new shareholder was unlikely to be another post-production company. Ms Sargent declined to comment, as did a spokesman for Cavendish.

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