Bain Capital Plans to Buy Japan’s Third-Largest Ad Agency for $1.35 Billion

WPP is currently Asatsu-DK's top shareholder

Bain Capital plans to purchase all shares from current shareholders. Bain Capital

Bain Capital Private Equity announced today it has filed a tender that will post tomorrow with the Tokyo Stock Exchange to purchase the common shares of Asatsu-DK, Japan’s third-largest agency by market share. Bain Capital plans to purchase all shares from current shareholders, including holding company WPP, which is currently the top shareholder in the agency.

According to company statement, the U.S.-based private equity firm is making the offer with “a view to privatizing the business and delisting it from the TSE,” citing the agency’s “highly competitive offer in digital advertising and a unique content business with market leading animation capabilities” as reasons for the purchase.

The offer of 3,660 Japanese yen per share represents a 15-25 percent “premium over recent trading level,” according to Bain Capital, and the entire deal is estimated to be worth around 152 billion yen, or roughly $1.35 billion, according to Reuters.

“This is a positive outcome for current shareholders to realize attractive value,” Bain Capital Private Equity managing director David Gross-Loh said in a statement. “The business has significant potential for growth that it has been unable to realize due to constraints that have weighed down on ADK’s return on equity for years. Privatization of the business would lift these constraints and provide the financial and strategic flexibility the company needs to succeed in a new digital environment.”

WPP declined to comment on the announcement.

“WPP and ADK have been working hard on a partnership for decades, but it hasn’t paid out the way their investments have in other markets,” founder and principal of international consultancy R3 Greg Paull told Adweek. “This will give ADK more privacy from the open market to take bigger bets and build some longer-term strategies.”

Paull said the move “fits in well with Bain’s Toshiba investment.”

“It gives them multiple entry points into the Japanese market,” he said, adding that the stock’s stagnation in recent years means “it seems a good time to invest” for Bain.

Sources close to the matter claimed Bain Capital’s bid “significantly undervalues the business.”

@ErikDOster Erik Oster is an agencies reporter for Adweek.