WPP Agrees To Merge Australian, New Zealand Businesses With STW - Quick Facts

(RTTNews) - UK-based advertising giant WPP Group Plc. (WPP.L, WPPGY) Monday announced that it has agreed to merge its Australian and New Zealand businesses with STW Communications Group Ltd. in Australia and New Zealand and increase its shareholding to 61.5% from 23.6%.

The company said the transaction will be structured through a contribution of WPP's Australian and New Zealand businesses into STW, for an enterprise value of A$512 million, with consideration consisting of the issue to WPP of new STW shares and a shareholder loan.

The STW Shares will be issued to WPP at A$0.915 per share, representing a premium of 30% to the 10 day VWAP prior to the date of this announcement.

WPP will move to become the majority shareholder in STW with a 61.5% equity interest, and also have the right to appoint a majority of Directors to the STW Board.

The merged group will have pro-forma LTM revenues of about A$1 billion and EBIT of A$142 million. It will become the primary vehicle for WPP in Australia and New Zealand. Following the merger, STW will change its name to align it with WPP. WPP said the deal is conditional on STW shareholder approval and the approval of the Australian Competition and Consumer Commission and the Foreign Investment Review Board.