Campaign’s sister publication PRWeek sat down with Read to dissect the implications of the sale, address the criticisms head-on, and reveal how WPP plans to navigate these choppy waters.
PRWeek: Why are you selling FGS Global, given that it has been operating so successfully?
Mark Read: Four years ago, we took three disparate companies in Finsbury, Glover Park Group and Hering Schuppener together with Roland [Rudd], Alex [Geiser] and the management team and took them into one business. We then supported them in buying Sard Varbinnen, and part of that was always the intention to move towards an IPO.
We could have done that as part of WPP, but when we took in KKR we saw the opportunity to accelerate the value creation. We still have two strong public relations businesses in Burson and Ogilvy PR. They’re probably closer to our core offer of corporate and consumer PR than maybe FGS Global. None of our peers have a business equal to it.
It enables us to concentrate on our core offer, support Burson and Ogilvy, realise significant value at an attractive price for the business. It’s an acceleration of the strategy we started to pursue four years ago. It’s a great result for WPP shareholders, who’ve got a gain of more than $500 million from three businesses that were, at the time we started, very different. It’s been a good strategic move for us [and the business principals] and we got a great price for it.
What did you make of Alex Geiser’s comments about the limitations of operating within a holding company, the fact that WPP always had the final say and the low synergies with WPP?
I think you’ll find that instead of WPP having the final say, KKR will now have the final say.
When we started working on it, the plan was always to do an IPO of the business and that would have happened in due course but this really accelerates it for us. Being part of WPP is quite nice. You get out of it what you put into it. There are many advantages to being part of the group that perhaps they didn’t take as much advantage of as they could have done.
Is Alex Geiser right when he says it’s hard to be entrepreneurial within an agency-holding company?
I don’t think KKR are going to be an easier manager of the asset than WPP was. If he thought WPP called the shots, it will be interesting to see how he finds life as part of KKR.
How do you view your remaining PR agency portfolio now that FGS is leaving?
Burson has had a tough time this year because of the Pfizer consolidation, but we’ll work our way through that, and I think it will be fine. We’ve got a good combination. Ogilvy is well integrated into the creative agency, and Burson has corporate and consumer capabilities. We now have the opportunity to take Burson into more strategic areas, and given Corey’s background, that’s a good thing.
Will Burson move more into the areas that FGS plays in?
We’re already there. Buchanan has already joined them in the U.K., and they have ambitions to expand internationally. This will allow us to take Burson a little bit more strategically into some new areas, which is good.
