WPP sells majority stake in communications firm FGS to KKR
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KKR has agreed to buy a majority stake in consultancy FGS Global from WPP in a deal that values the communications specialist at $1.7 billion.
Why it matters: The agreement boosts KKR's existing stake in the firm and is another example of private equity's pull to the communication advisory space.
By the numbers: WPP, the London-based advertising giant, also backs communications group Burson and public relations and marketing agency Ogilvy.
- WPP said on Wednesday that it agreed to sell all of its roughly 50% stake in FGS to KKR for $775 million.
- FGS firm partners will retain a 26% stake in the firm.
- The deal is expected to close by the end of the year.
Zoom in: FGS Global was formed in 2021 following the merger of D.C.-based consulting firm The Glover Park Group, U.K.-based firm Finsbury and German-based Hering Schuppener, which combined with Sard Verbinnen & Co.
- The 1,400-person firm is best known for strategic and financial communications counsel, government affairs and corporate positioning.
- KKR, one of the largest and oldest private equity firms in the business, bought into FGS last year in a deal that saw it purchase a minority stake from fellow private equity group Golden Gate Capital.
The big picture: Communication advisories remain in high demand due to ongoing corporate reputational risks brought on by stakeholder management, geopolitical tensions and increased regulatory scrutiny.
- Comms firms have relatively few costs other than its people, so major client lists produce heavy cash flows, a key attraction for PE firms.
- The number of private equity deals in the space has more than doubled to 146 in the last five years, according to LSEG.
What they're saying: "With KKR's reinforced support, we're poised to accelerate our growth, attract and empower new talent, and further our commitment to value creation that benefits all our stakeholders, especially our clients and employees," FGS Global CEO Alex Geiser said in a statement.
Go deeper: Private equity interest in communications firms is growing
