SHAREHOLDERS have approved the merger between STW Communications Group (ASX:SGN) and the Australian and New Zealand operations of UK-based marketing and advertising giant WPP plc.
The move will create the largest communications services company in the region with combined revenue of $850 million and staff of 5500.
It is also expected to create savings of up to $15 million a year for the group within three years of the two companies joining forces.
Robert Mactier, the chairman of the newly named WPP AUNZ business, says the board recommended the merger after 'extensive and exhaustive' negotiations with WPP over the terms of the agreement.
"With the approval of the merger, we can now get on with the job of delivering the benefits and synergies for all our stakeholders," he says.
"Through this preparatory work we are now even more convinced that this is the right strategic step for STW to take."
The merger will see STW acquire WPP's Australian and New Zealand businesses for about $512 million through the issue of 423 million STW shares at an implied price of 91c per share.
This is a 30 per cent premium to the share price ahead of the announcement of the planned merger in December last year. STW shares last traded around 99c.
STW will assume $125 million in debt as part of the transaction, while WPP, which is already a shareholder, will become the majority shareholder of the group. Its interest will rise from 23.6 per cent to 61.5 per cent.
CEO Michael Connaghan (pictured) says the merger will 'drive growth, extend our reach, significantly increase the scale of our operations and position WPP AUNZ as the clear market leader'.
"WPP AUNZ creates exciting opportunities for our clients, our shareholders and our people," he says.
"It will be an organisation filled with insights, ideas, creativity and solutions provided by this country's most outstanding talent.
"We will work together to meet our clients' challenges, and will look to provide more opportunities for our people to learn and grow.
"Teamed with the opportunity to tap into WPP's world-class tools, global resources and deep technology, WPP AUNZ will be a business unparalleled in our region."
The merger will be completed sometime this week, with the name change for the company expected to occur after shareholder approval in late May.
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