Companies in the news ... and how they were assessed
WPP: Sorrell cornered
In every crisis there is opportunity, and investors in WPP have lost no time demanding “sweeping” changes at the world’s biggest advertising conglomerate, said Simon Duke in The Sunday Times. Sir Martin Sorrell, who built the group from scratch, is under internal investigation for alleged “personal misconduct” – and faces “mounting pressure” to offload the group’s £3.5bn market research business. Big shareholders also want “a clear succession plan”. Even if Sorrell, 73, is exonerated, “his days as the king of Adland may be numbered” amid talk that the group, comprising “hundreds of ad, marketing and PR agencies”, could be broken up. Sorrell, who “unreservedly” denies claims made by a whistle-blower that he misused company funds, “believes the allegations were deliberately leaked by directors to force him out”. Certainly, “if someone wanted to create mischief there was no better time”, said Alex Brummer in the Daily Mail. The industry’s evolving model has hit WPP badly and shares have fallen 40% in a year. Sorrell, who took home £70m in 2015, has always been controversial. But it is “genuinely dispiriting” to see one of Britain’s great business builders thus reduced, said Jeremy Warner in The Sunday Telegraph. It used to be said he would be carried out in a coffin. “Unfortunately for the pint-sized dynamo, the knives are out and the coffin waits in reception.”
Shire/takeda: Japanese predator
Despite heightened political uncertainty, a potential US trade war with China and fraught Brexit negotiations, companies have embarked on “an unprecedented number” of big acquisitions this year, said the Financial Times. A series of “megadeals” in a recordbreaking first quarter saw takeovers worth more than $1.2trn in total. M&A activity is about “a third ahead of 2007, the previous high-water mark for takeovers”. The latest to weigh in is Japan’s top drugmaker, Takeda, which is pondering a $40bn takeover of its FTSE 100-listed rival Shire. After a briefing in Tokyo last week, there’s no doubt that Takeda, which began life in 1781 selling herbal medicines in Osaka, is serious, said Alex Ralph in The Times. Grabbing Shire, which specialises in rare diseases and neuroscience, would boost the Japanese predator’s presence in the crucial US market, where Irelandbased Shire made most of its $14.4bn sales last year. Still, as the smaller of the two firms, there are questions as to whether it can summon the necessary firepower. Under UK takeover rules, Takeda has until 25 April to reveal its intentions, but it shouldn’t bank on having the field to itself. Both Pfizer and Abbvie are possible contenders.
Suntory/coca-cola: sweet spot?
When Lucozade cut its sugar content last year, “sales swiftly lost their fizz”, said Lex in the FT. “Angry fans,” meanwhile, “have likened Ribena’s new low-sugar recipe to drain cleaner.” Both brands are now owned by Suntory, which insists that it is motivated by consumers’ “growing thirst for healthier drinks”, rather than avoiding the Government’s new sugar tax. But it is clear that you “tamper with a winning formula at your peril”. More drinks-makers than expected have avoided the levy by tweaking their recipes: the tax is expected to raise £240m annually – half the original forecast. “As much as 43% of the total is expected to be raised by Coca-cola”, which has widened its sugar-free range, but hasn’t dared “risk a repeat” of 1985’s disastrous “New Coke” reformulation.