Global communication firm WPP says it will increase stakes in Kenyan-based media company, Scangroup to 50.1 percent from its current 31.3 percent.
According to the London-based firm, it would acquire a total of 95 million Scangroup shares in a cash and shares deal worth Sh8.21 billion ($93.6 million), valuing the media firm at Sh24.44 billion ($278.7 million).
Business Daily reported that WPP, also known as Cavendish BV, will offer cash for 21.3 million shares at Sh85.85 ($0.97) and relinquish its ownership rights in 9 subsidiaries to ScanGroup in exchange for 72.7 million shares, guaranteeing it control of the Kenyan media group.
“Cavendish (WPP investment vehicle) therefore has effective control of ScanGroup,” said a statement by the multinational.
The statement clearly noted however, that WPP does not intend to make a takeover of ScanGroup.
The most significant development from the deal is the disclosure that the MD, Bharat Thakrar, will remain a shareholder, director and employee of the communication multinational.
It was expected that with such a major power shakeup, Thakrar – cofounder of the group with an 18 percent stake – would relinquish his shares rather than work under the control of an outside party.
But with stock market regulators barring him from selling his stake, Cavendish has confirmed that Mr Thakrar is committed to remain part of the company.
WPP acquired a 27.5 per cent in ScanGroup in 2008 for Sh1.3 billion ($14.8 million).
In 2011, it increased its direct stake to 29 per cent after it acquired 10 million shares from Andrew White — the creative director and cofounder of Scangroup.