WPP defers flotation plan

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The Independent Online
WPP, the advertising group, yesterday confirmed it had deferred floating part of its market research business until markets improved, writes Heather Connon.

The deferral, revealed in the Independent on Sunday, reflects the group's belief that the business would not have attracted a high enough value, even before last week's plunge in share prices.

It is one of the fastest-growing parts of the group, contributing 13 per cent of last year's pounds 95m operating profits. At the annual meeting in London yesterday, Gordon Stevens, chairman, said revenue from market research in the first five months of 1994 was up by 10 per cent, outstripping the 1 per cent increase in advertising revenues.

Flotation of the market research business - which includes Research International, Millward Brown and MRB - had been mooted for some time as a way to cut WPP's large debt burden. It was expected to be valued at about dollars 400m ( pounds 258m), and WPP was to sell about half the shares.

WPP said yesterday that flotation was 'continuously under review' but stressed it was under no financial pressure. Borrowings this year averaged pounds 281m, pounds 40m below last year, and the group is likely to be cash neutral in 1994 after paying pounds 29m of deferred consideration.

It is also considering a debt issue to increase the proportion of its long-term debt, but that is as unattractive as a share issue and, given the recent rise in long bond yields, it could have to pay as much as 10 per cent on long-term debt, compared with about 7 per cent on its current borrowings.

Mr Stevens said the group's trading so far this year was ahead of budget. WPP's shares closed 3p lower at 99p.

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