Sorrell claims Grey acquisition is no big deal for WPP
LONDON – WPP's chief executive Sir Martin Sorrell has hit back at comments made this week by investment bank Morgan Stanley, claiming Grey Global is 'not enormous' and acquiring it would not affect WPP badly.
Earlier this week Morgan Stanley said it believed the acquisition of Grey would not help WPP's long-term goals.
"WPP's rating has been dragged down in sympathy with its US advertising counterparts, who have been hit by worries over dilutive share conversions," the bank said in a research note on Monday.
Some investors were concerned that WPP could be caught up in a bidding war with Havas and several private equity firms. This would push up Grey's purchase price.
However, today Sir Martin told Reuters:"It doesn't move the needle at all. Grey, in the context of WPP, is not enormous."
He confirmed WPP was still conducting due diligence. "We continue to noodle," he said.
WPP, whose agencies include Young & Rubicam, Ogilvy & Mather and J. Walter Thompson, said pre-tax profit excluding goodwill and other items for the six months to June 30 was £234.7m. Revenue climbed 6% to a record £2bn today.
However, shares in the company fell by 2% after WPP said it was concerned about the state of the US economy following the boom provided by the presidental elections and the Olympics. WPP's shares were down by 10.5p to 484p.
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