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WPP weighs on FTSE as Sorrell quits amid probe

WPP weighs on FTSE as Sorrell quits amid probe
 

WPP (WPP) had weighed on the FTSE 100 after Martin Sorrell unexpectedly resigned as chief executive of the world's biggest advertising agency amid an investigation into alleged misconduct.

Shares in WPP fell 4% to £11.41, dropping to the bottom of the FTSE 100, down 23 points, or 0.3%, at 7,241.

Sorrell announced his departure in a letter to WPP staff published on Saturday night ahead of the findings of the investigation.

'The current disruption we are experiencing is simply putting too much unnecessary pressure on the business, our over 200,000 people and their 500,000 or so dependents, and the clients we serve in 112 countries,' he said.

'That is why I have decided that in your interest, in the interest of our clients, in the interest of our shareowners, both big and small, and in the interest of all our other stakeholders, it is best for me to step aside.'

WPP announced this morning that the investigation into Sorrell had concluded. 'The allegation did not involve amounts that are material,' it said.

Chairman Roberto Quarta will become executive chairman until a new chief executive is found.

Shore Capital analyst Roddy Davidson retained his 'hold' rating on the shares on the news.

He said the news had highlighted 'the apparent lack of detailed succession planning that has troubled us and many observers for some time'.

'The short term trading outlook appears challenging and we believe Sorrell's departure will create further volatility in the group's share price,' he said.

Numis analyst Paul Richards, who rates the shares an 'add', said he expected new management 'accclerating the current process of reducing overlap and increasing flexibility'.

'Our base case is for a new management team to continue and refine the existing strategy, though we acknowledge that any group without a chief executive is vulnerable to a bid approach in the interregnum,' he said.

WPP was joined at the bottom of the index by Sage (SGE), 3.3% lower at 596.4p, as the shares continued to drift following Friday's cut to revenue guidance.

Whitbread (WTB) jumped to the top of the FTSE 100, up 6.7% at £41.98 after activist investors Elliott Advisors raised their stake in the Costa Coffee and Premier Inn owner to 6% of the shares.

Among 'small-cap' stocks, Carr's (CARRC) jumped 12.2% to 154p on strong half-year results for the agricultural and engineering group.

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