WPP Aunz Ltd (ASX: WPP) shares are exploding today, up 30.95% to 55 cents per share at the time of writing. The WPP share price closed at 42 cents on Friday afternoon, but opened at 54 cents this morning before climbing as high as 56 cents, then settling to its current level.
Although today's move doesn't quite get WPP over the line in terms of the company's 64 cents per share 52-week high, it does mean that WPP is up more than 200% from the 52-week lows we saw back in early April.
So what is WPP? And why is this company's share price rocketing so enthusiastically today?
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WP-who?
WPP Aunz is a company which, according to its website, brings together "Australia and New Zealand's most creative minds to help reshape business futures". Put simply, it's a marketing services company with communication, public relations and advertising rolled into one. WPP Aunz is actually a group of 90 subsidiary companies.
WPP Aunz (the latter is not a German word and stands for 'Australia and New Zealand') is actually a subsidiary of WPP plc (LSE: WPP) itself. The WPP plc company is WPP Aunz's global parent, is publicly listed in the United Kingdom and has a current market capitalisation of 9.18 billion pounds sterling. WPP plc currently owns 61.5% of WPP Aunz' shares.
The ASX's WPP Aunz has had an arguably turbulent history. Its last share market high was all the way back in 2002, when the company was priced at over $4 per share. It hasn't seen those heights since, meaning shareholders who bought in back then would still be down more than 86% on their money today. Even those who might have bought in back in August 2016 for more than $1.33 are still down more than 58%. That was despite WPP Aunz merging with another company – STW Group – back in 2016.
WPP Aunz's 90 subsidiaries are all small, specialised providers of marketing services, tailored for specific clients or allocations. For instance, its Barton Deakin division focuses on governmental relations, with a specialty in "Liberal-National governments and oppositions". Cannings is a corporate and financial communications consultancy. Beyond Analysis is a business data analytics "solutions provider". Blaze Advertising specialises in "brand building" and "property marketing". You get the idea.
Why are WPP shares on fire today?
It's likely we can put today's massive move in the WPP Aunz share price today down to an ASX announcement the company released to the markets before open this morning. This announcement was advice that WPP Aunz has received an "unsolicited proposal" from its parent, WPP plc, to "acquire all of the ordinary shares in WPP AUNZ that it does not already own". The proposal is offering a price of 55 cents per share, to be paid for in cash.
That 55 cents a share offering is, coincidentally, the share price WPP Aunz has appreciated to at the time of writing. If this deal goes ahead, it will result in WPP plc owning 100% of WPP Aunz, which would presumably result in WPP Aunz de-listing from the ASX upon its completion.
The announcement notes that WPP plc has "reserved the right to withdraw the Proposal at any time prior to execution of an implementation agreement in relation to the Proposal".
It's also worth noting that, as at the time of writing, WPP Aunz and its directors have told existing shareholders that they "are advised to take no action in relation to WPP plc's Proposal until they receive the Independent Directors' formal recommendation".
