Zacks_Analysts' Blog : WPPGY on an Acquisition Spree - Analyst Blog

Advertising titan, WPP plc’s (WPPGY) leading advertising and marketing communications network, Ogilvy & Mather recently acquired about 49% interest in a Chinese advertising agency, Nanjing Yindu Advertising and Commerce Co., Ltd.

The strategic investment immensely supports the company’s expansionary plans in China, especially in the important Yangtze River Delta region. Yindu was founded in 1994 and currently employs over 250 people. The agency reported roughly RMB 57.8 million in gross assets for the year ended 31 December 2010 while billings for the same period were RMB 428.5 million.

The target agency specializes in providing strategic planning, advertising, branding and corporate identity, print and media production and media buying. Its vast client base includes the likes of Jiangsu Mobile, Heilan Home, Jiangsu Yanghe Brewery, Nanjing Iveco, MoonHare, Simcere, Longliqi and China Construction Bank.

Of late, WPP plc’s other wholly-owned operating companies carried out a series of acquisitions which enhanced WPP’s presence in the untapped markets of fast growing emerging nations. Among these, the company’s full-service digital marketing agency, VML Inc. acquired a major shareholding in Singapore-based digital marketing agency Qais Consulting, a leading digital marketing agency in Singapore.

Cohn & Wolfe, WPP’s global communications and public relations group, agreed on the acquisition of a major stake in XPR, among Singapore’s largest independent public relations and digital communications agencies.  

Ogilvy Public Relations Worldwide also agreed to acquire a majority stake in Mind Resource Healthcare Consulting Limited. The target firm is an independent healthcare communications agency in Hong Kong.

The current Zacks Consensus EPS Estimates for WPP Group are $5.22 and $5.69 for the fiscal years 2011 and 2012, respectively. The estimates represent year-over-year growth of 39.65% for 2011 and 8.94% for 2012.

Based in Dublin, Ireland, WPP Group plc provides advertising and communications services worldwide. The company faces stiff competition from its peers like Interpublic Group of Companies Inc. (IPG), Omnicom Group Inc. (OMC), and Publicis Groupe SA (PUBGY.PK).

We currently maintain a Neutral recommendation on the stock.