WPP plc to Buy Stake in Manajans

Advertising titan, WPP Group Plc. ( WPPGY - Analyst Report ) recently consented to acquire a Turkey-based agency, Manajans Thompson Reklam Isleri A.S. The acquisition will be given effect through the company’s wholly owned subsidiary, JWT, an international marketing communications company.

The completion of the acquisition is subject to regulatory approvals. After the completion of the acquisition, the company will own a 100% stake in Manajans.

Manajans was established in 1944 in Istanbul. The company generated roughly TL 8.0 million in revenues for the year ended 31 December 2011. Gross assets for the same period were TL 8.6 million. The company has a client base consisting of Bayer, Nokia, Shell, Turkcell and Ülker.

WPP Group’s acquisitions and investments are all aimed at expanding the company’s operations in fast growing emerging markets and enabling access to vast untapped markets in those regions. In the first quarter 2012, the company made roughly 10 acquisitions in new markets, 2 in consumer insight and 2 in other areas. These strategic acquisitions represent a major competitive advantage for the company and enhance its creative reputation and co-operation among the Group companies. Going forward, WPPGY plans to spend roughly £300 million annually on acquisitions.

The current Zacks Consensus EPS Estimates for WPP Group are $5.62 and $6.29 for 2012 and 2013, respectively. The estimates represent year-over-year growth of 4.52% for 2012 and 11.88% for 2013.

WPP Group operates in a highly competitive and fragmented communication services industry. The groups major competitors are large multinational communication services companies, regional and national advertising and marketing service firms as well as newly emerging media companies. This Dublin, Ireland-based advertising and communications services provider competes with other industry players including Interpublic Group of Companies Inc. ( IPG - Analyst Report ) , Omnicom Group Inc. ( OMC - Analyst Report ) and Publicis Groupe SA.

We currently maintain a ‘Neutral’ recommendation on WPP Group. The stock also bears a Zacks #3 Rank, implying a short-term (1-3 months) ‘Hold’ rating.