Sir Martin Sorrell’s WPP is reportedly running the slide-rule over a deal for DunnHumby – valued by some at up to £2bn – in a move which would give the marketing group’s data operations a major shot in the arm.
Last month, WPP strengthened its commitment to data-driven marketing by signing an £800m big data deal with IBM to transform the group’s global technology platform and launch new digital services to help its clients get closer to their customers.
WPP already brings in more than £10bn in revenue from its data marketing operations; over 25% of WPP’s annual income. As far back as 2013, Sorrell claimed “we are now Maths Men not Mad Men”, in reference to the American TV show about adland.
According to a report in the FT, WPP has become the latest firm to eye up a deal as new Tesco boss Dave Lewis seeks to extract value from the data division, founded by husband and wife team Clive Humby and Edwina Dunn in 1989 in the kitchen of their Chiswick home.
The business, which now employs more than 2,000 people in 30 countries, has run the Clubcard programme for over 20 years but also works with 400 of the largest retailers and brand-owners across the world, including Procter & Gamble, Coca-Cola, Diageo, GlaxoSmithKline and Mondelez International.
As well as WPP, several private equity groups – including buyout specialist Clayton Dubilier & Rice which is advised by former Tesco chief Sir Terry Leahy – are interested in the data giant. None of them has yet to comment, although it has already been claimed US private equity buyout specialist TPG has had one bid for the company rejected.
New boss Lewis is due to issue a trading update this week, in which it has been claimed he will reveal that hundreds of jobs are to be slashed at Tesco’s headquarters in Cheshunt, Hertfordshire; it will also close some of its regional offices.
However, the cuts could be overshadowed by potentially disastrous trading figures, with some analysts predicting Tesco will record a loss in its UK operations. One analyst told The Sunday Times that any loss “would probably be in the tens of millions”.
This in turn would pile the pressure on Lewis to offload non-core businesses, including DunnHumby, Blinkbox and even Tesco Bank.
Late last year, former Tesco chief Grant Harrison – the man who led the team behind the launch of Clubcard – urged Tesco to sell DunnHumby and scrap Clubcard, too.
Speaking exclusively to DecisionMarketing, Harrison said: “Tesco doesn’t own Weiden + Kennedy or its direct and digital agencies. Why should it? Better to hold the data at Tesco and then use another company to carry out creative analysis.”
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