Japanese ad firm approaches Aegis

LONDON - Reuters

Japanese ad giant Dentsu is buying marketing group Aegis for 3.2 billion pounds ($5 billion), the biggest deal in its history as it seeks to expand outside its home market with the British firm’s European and digital business.

Dentsu said it had agreed to pay 240 pence for each Aegis share, a 48 percent premium to the closing price on July 11, sending shares in the target group up 45 percent to 235 pence. 

Analysts described the deal as a perfect strategic fit and praised the chief executive of Aegis, Jerry Buhlmann, who has turned the group around since taking over in 2010.

“It’s a fantastic deal for Aegis,” Liberum analyst Ian Whittaker told Reuters. “It’s an extremely good multiple and it could have a positive benefit for all the other agency groups, particularly Havas.”

Aegis has long been seen as a potential takeover target, although it had for years been linked to the French group Havas as French financier Vincent Bollore was the largest shareholder in both.

For Dentsu, the deal enables it to find new growth outside its home market, which is eroding. Though the company dominates traditional Japanese print and broadcasting sectors, overall ad industry revenue fell 2.3 percent to 5.7 trillion yen ($72 billion) in 2011 -- the fourth annual contraction for an industry that in the past decade has shrunk by almost 6 percent.

Bid for market leadership 

“Dentsu and Aegis will be the market leader in the Asia-Pacific region, enjoying a strong presence across Europe and the fastest growing agency network in the US,” President and CEO of Dentsu, Tadashi Ishii, said.

 “In recent years, under the leadership of Jerry Buhlmann and his team, Aegis has been recognized as the most successful independent media and digital communications agency with strong performance momentum and talented, client-focused employees.”

Dentsu said it had already purchased or had irrevocable undertakings in relation to around 30 percent of Aegis’ stock, including shares from Bollore. The Bollore group confirmed it had agreed to sell its 26.4 percent stake to Dentsu for 240 pence a share.