ADK completes deal to sell to Bain Capital

Bain Capital has successfully acquired the shares needed to take over Asatsu-DK (ADK). The private-equity firm announced 87% of ADK shares have been tendered to its offer. Bain's deal to buy ADK, Japan's third-largest advertising agency, for 3,660 yen (US$33) per share required the support of 50.1% of shares to proceed.

The completion of the tender offer follows a tense period during which WPP, ADK’s largest shareholder, accused Bain of undervaluing the company and ADK of incompetence and improper practice. It also marks the first time for a US private equity firm to buy a Japanese advertising company. 

“Today’s successful tender offer marks an important step in the right direction for ADK as we move closer to privatizing the business in order to better secure its future in a fast-changing market," Yuji Sugimoto, a managing director at Bain Capital Private Equity, said in a release. "This is also a very positive outcome for ADK’s shareholders, who have been able to realize attractive value through our fully priced offer. We look forward to working closely with ADK’s management over the coming months to accelerate its transformation efforts while we continue to work towards the end goal of privatizing the business so it can realize its full potential more quickly.”

Shinichi Ueno, president and group CEO at ADK, said the company has "long believed" it needed the "financial and strategic flexibility that can only be achieved through becoming a private business" and expressed confidence in Bain Capital being "the right partner to take us through this next phase of transformation".

Bain’s bid to buy ADK first came to light on 2 October. WPP was quick to contest the move, and on 12 October issued a statement accusing ADK of having improperly tried to end a 20-year alliance between the two companies. On 2 November, WPP initiated legal proceedings against ADK.

WPP later softened its stance, stating on 16 November that it was willing to invest more in ADK to help it achieve its growth ambitions. The offer was an apparent move to attract the support of fellow ADK shareholders. Just under a week later, WPP backed down altogether, agreeing to sell its stake in ADK.

ADK has made clear that it wants to grow internationally and become “digital first”, ambitions it said were stifled by the alliance with WPP. Bain has expressed interest in ADK's content and animation business. Bain has made a number of deals in Japan, including the purchase of Toshiba's chip unit for $18 billion in September.

In November, Bain managing director David Gross-Loh said the traditional business model of advertising agencies was "in crisis" and that privatisation was the only way for ADK to gain the flexibility it needs to become more competitive.