WPP to sell its China-based advertising business to Alibaba, Tencent and China Media?

Alibaba and Tencent in talks over a stake in WPP

Sources at Sky News have revealed that Alibaba Group, Tencent Holdings and China Media Capital Holdings (CMC) are in early-stage discussions about buying roughly 20% of WPP China.

According to the sources, the negotiations which could take several months to conclude were expected to value the business at between $2bn and $2.5bn.

WPP’s intention to seek partners predates Martin Sorrell’s departure in April as the advertising group’s chief executive. However now the  73-year old has staged his comeback by taking charge of a shell company, Derriston Capital.

WPP’s ex-boss told Cannes that there will be a huge fragmentation of the ad boys from 6 down to 3. He predicted that Omnicom, Publicis and WPP will be bought over by clients. Could this be a premonition come true?

Roberto Quarta, WPP’s chairman, is understood to have travelled to China this month with Andrew Scott, one of its co-chief operating officers, to continue talks about the prospective deal.

However, it is uncertain if all three Chinese companies would end up participating.
The move would also help WPP’s business in China at a time of rapid growth in its advertising industry.

China’s e-commerce giant, Alibaba has already agreed to pay $2.23 billion for a roughly 10% stake in Focus Media.

The digital advertising company which operates screens in subways and elevators across China.

The move holds the potential to boost Alibaba’s core e-commerce operations and extending Alibaba’s reach as a media operator, and may also signal a growing interest by Alibaba in the advertising sector.