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Sorrell Slams Nielsen Valuation as Both Report Results
WPP CEO Sir Martin Sorrell says the figure reported in the press for Nielsen's possible valuation is 'out of the ballpark' and 'doesn't work in any way, shape or form'. Both companies reported encouraging results today, WPP forecasting growth for the year and Nielsen seeing 4% real revenue growth over Q1 2009.
According to the FT, Sorrell was asked by City analysts in London about his historical interest in Nielsen, and replied: 'They seem to be running a beauty parade for an [IPO]... If the press is correct, the valuation they are talking about is out of the ballpark. I don't think it works in any way, shape or form.' (www.ft.com ).
WPP, which saw a like-for-like revenue fall of 5.8% in Q1 2009, did better in Q1 2010 - reported revenue of £2.08bn was flat, and in real terms the decline was just under 2%. For the month of March, the group reports 1% growth, its first positive figure since December 2008. The firm is now tentatively forecasting 2% growth for the year, with Sorrell admitting that having been over-optimistic in 2009 he has perhaps been pessimistic in 2010. WPP has lifted its recruitment freeze and increased staff numbers by 1% since 1st January.
Among the highlights, Sorrell said the US had seen a remarkable upturn in the first quarter with constant currency growth of 4%, and that there was 'positive' growth in the UK, while elsewhere in western Europe things remain difficult and mainland China and India showed combined growth of more than 5%.
Sorrell told the FT WPP has committed to a £100m ceiling for dealmaking this year, and is looking at a 'heavy pipeline' of smaller deals: he played down any suggestion that Nielsen might be a target, even at a much lower price than the $21bn report in the paper last week. Sorrell described the latter as a 'crazy number', with even a valuation of $14bn to $15bn 'high'. The latter is 10-11 times the research giant's EBITDA, a similar figure to that used to calculate WPP's own enterprise value of £12.1bn.
WPP's recovery slightly lags rivals Publicis Groupe and Havas, which reported revenue growth of 3.1% and 1.5% in the first quarter.
In its own financial results for the quarter ended March 31, Nielsen reported revenues of $1.20bn, up 9%, or 4% at constant currencies versus Q1 2009. Covenant EBITDA was $1.36bn for the twelve months ended March 31. The company's total debt was $8.57bn and cash balances were $408m.
Web sites: www.wpp.com and www.nielsen.com .
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