WPP break-up likely following Sorrell’s departure, says Tilbian

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Martin Sorrell, the former chief executive officer of WPP Plc.

Tilbian said WPP looked ripe to be broken up. “It’s a circus and he was the ringmaster. The very fact that they are going to need at least three people to replace him, kind of tells you that.”

She said breaking up WPP and selling off the data management firm Kantar would provide the board with “an elegant way” to cut an expensive dividend.

“The payout ratio is too high, especially given the debts. I mean £5 billion is a lot of debt at the top of the cycle,” she added.

WPP was founded as Wire and Plastic Products in 1971 to manufacture wire shopping baskets. It was bought by Sorrell as a shell company in 1985 and retooled as a worldwide marketing services company. The firm is split into different areas of income, including advertising and media investment, PR, market research, as well as digital and healthcare.

After years of acquisitions and stellar growth, the firm has struggled and in the last year has witnessed its share price slump by around a third in value.

Tilbian, who is now a non-executive director at Saatchi & Saatchi, said WPP currently faced a perfect storm of cyclical and structural headwinds, competition from internet giants and the threat of audit consultancies muscling into the marketing world.

She said the idea of a big consultancy such as Accenture, PWC or KPMG coming in with a mammoth bid for WPP was entirely plausible.

“It is all about getting closer to the end user. And because the agencies are all involved in getting the new product development and strategic placing of the brand, it kind of gets the consultancy in at the very ground floor.”