WPP hits six-month high as activist Silchester takes stake

By Geoffrey Smith 

Investing.com -- WPP (LON:WPP) stock hit a six-month high on Monday after a report that activist investor Silchester increased its stake in the U.K.-based advertising and media group becoming its third largest shareholder.

The news, reported by the Sunday Telegraph but not confirmed by any release to the London Stock Exchange, fostered speculation that Silchester may press the company to break itself up, separating its core advertising agencies from other media-related activities and further dismantling the empire of founder Sir Martin Sorrell.

Sorrell left the company in 2018 after criticism of his high compensation.

WPP has had a rough couple of years since the pandemic erupted, making its first annual loss in many years in 2020. Although it returned to profit in 2021, it said margins in 2022 would be pressured by input cost inflation and difficult conditions in its Chinese operations, where a sequence of stop-start lockdowns had depressed consumer sentiment. The China business at least now appears on the cusp of a rebound, as the country's relaxation of its COVID-19 lockdowns allows its clients to target a more active and mobile customer base with their ads.

The Telegraph had speculated that Silchester could also press for the removal of WPP chairman Roberto Quarta. Quarta is a partner with private equity firm Clayton, Dubilier&Rice, whose bid for U.K. supermarket chain Wm Morrison in 2021 was thwarted by resistance from Silchester.

By 11:00 ET (16:00 GMT), WPP stock was up 2.5%, outperforming the FTSE 100 which was up 0.3%.