- WPP acquires Bower House Digital

- Deal strengthens WPP's digital offering

- Shares held back by by fears of slowdown in advertising spend

Shares in global advertising agency WPP (WPP), drifted 0.5% lower to 815.6p after announcing the acquisition of Bower House Digital, a leading marketing technology services agency located in Australia.

The acquisition strengthens WPP’s digital offering.

Shares in WPP have fallen by 11% over the last month, and by 27% over the last six months.

Investors have become becoming increasingly concerned about the prospect of a downturn in global advertising spend given the risks of a global recession.

SHIFT TO DIGITAL

Strengthening WPP’s digital capabilities via acquisition makes strategic sense given the trends apparent in the first quarter results announced in April 2022.

Management’s forward looking comments flagged strong demand for the group’s digital media, e-commerce, data and marketing technology services.

Bower designs, builds and deploys digital experiences. Clients include Aesop, Bunnings, Bupa, Target and Myer. Its core focus is implementing Saleseforce Marketing Cloud solutions.

Bower will be incorporated within Ogilvy’s global network. The goal is to enhance the group’s ability to deliver technology driven marketing solutions to clients.

Rose Herceg, WPP President, Australia and New Zealand, said:‘Companies are seeking one integrated communications solution that combines creativity, technology and data. Bower House Digital's knowledge in marketing technology will further strengthen our digital expertise in Australia and New Zealand. I'm excited to welcome the Bower House Digital team and clients to WPP.’

The recent first quarter results saw management raise guidance for full year 2022 revenue less pass through costs increased from 5% to 5.5%-6%.

EXPERT VIEW

Shore Capital analyst Roddy Davidson said ‘This looks to be a strategically and well positioned targeted addition, and illustrate that WPP is back on the front foot with regarding acquisitions’.

Davidson added ‘We regard WPP stock’s valuation 2022 and 2023 PE ratios of 9.1x and 5.5 respectively as extremely modest for a well managed, market leading global player’.

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Issue Date: 30 Jun 2022