Japan's third largest agency ADK (or Asatsu-DK) still trails behind leaders Dentsu and Hakuhodo. Original core agency Asatsu closed the gap a little as a result of a 1999 takeover of Dai-Ichi Kikaku, then the #7 agency, now the DK in ADK. Shortly afterwards, the company forged a strategic alliance with UK-based marketing services giant WPP. That ongoing relationship makes ADK arguably the most Western-leaning Japanese agency after Dentsu, even if the partnership is restricted to Asian markets. ADK still has only a minimal direct presence in developed Western markets. Yet in a dramatic turn of events in 2017, ADK gave its backing to a private equity buyout and gave notice that it wishes to sever its 20-year partnership with WPP.
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Adbrands Weekly Update 5th Oct 2017: Private equity fund Bain Capital launched a surprise bid for Japan's third-largest advertising agency, Asatsu-DK. The offer values the publicly quoted agency at around $1.5bn, roughly 15% above its pre-announcement market value, and has the full support of ADK's board. CEO Shinichi Ueno said “In collaboration with Bain Capital, we will set a course towards bold structural reforms and growth strategies that will help us to enhance our competitiveness and to expand our market share, both in Japan and overseas." However, the deal doesn't appear to be supported by ADK's biggest shareholder WPP, which holds around 25% of equity to anchor a 20-year global partnership between the two groups. However, the Japanese group says the two companies now disagree on strategy, and that it hopes to unwind their partnership. It said that relationship now plays "less of a strategic role in the company’s ongoing development, and has not materially contributed to the profits of the business". Several media outlets quoted "people close to WPP" who suggested that the offer "serious undervalues" ADK's second largest shareholder Silchester International Investors, with 17%, also said the deal is too cheap. Bain's offer is contingent on it accumulating at least a majority of ADK's shares. The markets are betting it will have to raise its price to get there: ADK's shares have soared by more than 20% following the announcement, pushing the group's valuation to around 5% above Bain's offer.
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