Silchester Joins WPP in Calling Bain's Bid for Asatsu-DK Too Low

  • Japanese ad agency’s second-largest holder seeks other bids
  • Silchester says Bain’s offer substantially undervalues Asatsu

Shareholders of Asatsu-DK Inc. are lining up in opposition to its $1.3 billion proposed takeover by Bain Capital LP.

Silchester International Investors LLP, the second-largest holder of Asatsu-DK, joined top investor WPP Plc in calling out the offer by Bain as too low. WPP was quick to object to the price for Japan’s third-largest advertising agency after Bain’s tender offer was announced on Monday, according to people familiar with the matter.

“The current offer price substantially undervalues ADK, its assets, franchise and future opportunities,” London-based fund Silchester said in an emailed statement Wednesday. “Silchester are not convinced that ADK’s board have made significant or sufficient endeavors to find other buyers for the business, now that it is for sale.”

The dissent from Silchester and WPP may force Bain to revisit its offer as it seeks to break Asatsu-DK away from WPP and delist the company. Asatsu-DK is trading above the private-equity firm’s offer price on expectations that it’ll sweeten its proposal or that other bidders will emerge.

The Boston-based firm’s proposed 3,660 yen a share offer was 15 percent more than Asatsu-DK’s previous closing price. Asatsu-DK said it would end its tie-up with WPP and sell its 31.3 million shares in the world’s largest advertising company, which itself owns about 25 percent of Asatsu-DK.

Silchester, which owns 17 percent of Asatsu-DK, criticized the Japanese company’s board for moving ahead with the sale of its WPP shares at a depressed price, triggering tax liabilities and advisory fees, without prior consultation and approval from shareholders. The fund encouraged other prospective buyers of Asatsu-DK to come forward and said it would consider any higher offer.

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