In one of the industry’s remarkable deals, Japanese advertising giant Dentsu is all set to buy Aegis Group in a GBP 3.16 billion or USD 4.9 billion deal. This move is being seen by Dentsu to create a global media and marketing network to challenge established ad firms like WPP and Omnicom Group Inc. The transaction is the biggest in Dentsu’s history.
In this deal, Tokyo-based Dentsu has bought a 15 percent stake and will acquire a further 5 per cent from companies controlled by Vincent Bollore, Aegis’s largest shareholder. Denstu executive vice president, Shoichi Nakamoto said at a press conference, “We will consider consolidating Aegis from next fiscal year if we close the acquisition by the end of December.” Dentsu plans to keep current Aegis managers. London-based Aegis is the biggest independent buyer of advertising space and this year won a contract to manage $3 billion annual ad budget for General Motors Co.
Now Aegis shareholders will get 240 pence in cash, or 48 percent more than the stock’s close in London on Wednesday, in an offer recommended by directors, the companies said. “This clearly takes Dentsu to a new level and puts them up there with the big guys. At face value this is strategically a good deal for both Dentsu and Aegis and unequivocally make sense,” said Alex DeGroote, an analyst at Panmure Gordon & Co in London.
This move by Dentsu came at the heel of end of its strategic alliance with Publicis Groupe SA, the third-largest advertising company. Publicis bought back its shares held by the Japanese company. Dentsu still holds a 2.1 per cent stake in Paris-based Publicis. While Europe’s slowdown has led ad agencies to expand into faster-growing markets and fuelled acquisitions in Brazil, Russia, India and China, the takeover of Aegis will help Dentsu reduce its reliance on Japan, where the company generated 84 per cent of its sales in the last fiscal year, the market watchers say.