LONDON — Sir Martin Sorrell announced on Saturday that he is leaving advertising giant WPP after 33 years as CEO.
His exit comes as something of a surprise — investors had no reason to expect his exit as recently as three weeks ago. But it was reported at the start of the month that Sorrell was subject to an internal investigation into alleged misconduct and misuse of assets.
Sorrell denied all the allegations against him but said in a letter to staff on Saturday that the “current disruption” was “putting too much unnecessary pressure on the business.”
WPP chairman Roberto Quarta will act as interim CEO until a replacement is found. Meanwhile, Mark Read, CEO of WPP’s Wunderman unit, and Andrew Scott, European COO, have been announced joint-COOs of WPP. Liberum’s media analyst Ian Whittaker says this “will heighten speculation that they will be the top contenders for the slot.”
Whittaker isn’t the only analyst reacting to Sorrell’s departure. Others are touting a potential breakup of WPP, the sell-off of minority investments, and even possible disruption to bids for key accounts.
Here’s what major analysts are saying:
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BARCLAYS: ‘Operating management distracted during the expected Mediapalooza 2’
Barclays European media analyst Julien Roch and team: “Potential negatives resulting from change in CEO: We see three potential negatives: (1) operating management being distracted during the expected Mediapalooza 2 [lots of major accounts being re-tendered], (2) new CEO could restructure WPP more radically leading to high restructuring costs in the short-term, which would take WPP above its gearing target and (3) European media shares usually underperform around management changes.
“Potential positives resulting from …read more
Source:: Business Insider