WPP plc: Maintain cautious credit view

研报英文原文证据摘录

WPP plc: Maintain cautious credit view

Comfortable with buyout tail risk

Despite lots of media speculation over the past year, we view buyout risk as limited mid-

term. Other agencies would be buying a relative underperformer with what we view as a

less competitive offering and high exposure to creative services (c. 25% net revenues),

which face greater structural pressures. WPP’s size (EV >£7bn) also limits the pool of

potential buyers. Other potential strategic buyers could be reluctant to acquire a

business at the fore of AI-related pressure, while managing similar risks themselves.

Private equity (PE) ownership is unlikely, we think, given WPP already carries high

leverage (LTV c. 60%), has limited hard asset backing and operates a cyclical, project-

based business model not usually suited to PE ownership.

There has been speculation that WPP should be “broken up”, with media articles

suggesting that buyer interest tends to revolve around what we view as the crown jewel,

WPP Media (c. 40% of net revenues). We think a break-up could be difficult given (i) the

increasingly intertwined nature of WPP, (ii) the potential for large dis-synergies, and (iii)

the risk that RemainCo would be left exposed to structurally declining disciplines. Please

see our equity note for additional details on potential M&A risk: M&A to the rescue?.

Asset sale sensitivity analysis

Our key takeaway is that a 6x to 8x EV/EBITDA sale multiple for Public Relations could

bring S&P’s Net Debt/EBITDA and FOCF/Net Debt metrics within the stabilisation

threshold. However, as outlined on the front page, this alone likely wouldn’t stabilise the

rating, with S&P’s focus instead on whether WPP can return to organic growth in FY27E.

Exhibit 2: Est.