Sky News has reported that two of China’s leading tech giants, Alibaba and Tencent, are currently in early-stage discussions to buy a minority stake in the Chinese unit of British advertising group WPP.
The purchase is being negotiated alongside China Media Capital Holdings (CMC), and is estimated to be for a 20% stake in WPP China. Should the deal go ahead, the unit would be valued at between $2 billion and $2.5 billion, sources told Sky.
The deal would likely see the establishment of a new holding company composed of WPP’s China business and the new stake holders, the sources said.
The move comes as WPP manages major changes to its leadership, after company founder Martin Sorrell stepped down in April amid complaints of personal misconduct. Sky reports that discussions of the Alibaba/Tencent deal had already kicked off before Sorrell’s departure.
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