JAPANESE advertising agency Dentsu has, after a string of attempts, finally cracked the global market with a £3.16bn bid for Aegis.
Shares in Britain’s second biggest ad agency jumped 45 per cent to 234p after Dentsu unveiled its 240p per share offer, a 48 per cent premium to Wednesday’s closing price.
The deal –the second biggest the ad industry has ever seen – comes just days after Publicis acquired top British agency Bartle Bogle Hegarty.
It also falls in the wake of ad giant WPP’s £348m deal for AKQA – a company that Dentsu tried to buy two years ago for $600m (£389m).
The Tokyo-based firm was similarly unsuccessful in its 2009 attempt to acquire Microsoft’s digital agency network Razorfish for $700m, losing out to a rival offer from Publicis.
But Dentsu’s multi-billion bid for Aegis, which comes with irrevocable undertakings representing 30.5 per cent of its shares and unanimous board backing, will catapult the firm into the advertising magic circle.
The joint income of Dentsu and Aegis – £3.8bn based on 2011 revenues – nears that of US giant IPG, the ad world’s fourth biggest agency behind Publicis, Omnicom and WPP.
Dentsu will become Asia’s biggest marketing agency when it absorbs Aegis’ clients – 20 per cent of which are based in Asia – and the second biggest in Europe.
However, senior ad industry sources pointed out that the two groups could face client conflicts, citing Dentsu’s work for Toyota and the $3bn a year General Motors account Aegis won from Publicis in January.
An Aegis spokesperson dismissed these concerns, saying it is “not a significant issue”, adding that the group also has internal competing clients – it works with BMW as well as GM – which he said was healthy for the business.
Analysts have not noted client conflicts as a problem and think that a rival bidder is unlikely.
Alex DeGroote at Panmure Gordon said the support of Vincent Bolloré – Aegis’ biggest shareholder – makes a counter bid improbable, also noting that most other would-be buyers have been active on other deals lately and might not have the spare cash.
Dentsu said it would finance the deal with a loan from the Bank of Tokyo-Mitsubishi UFJ and its own cash pile, which was boosted recently when Publicis bought back €644m (£508.5m) worth of its shares from the Japanese firm, ending a nine year long relationship. The deal, expected to complete in the fourth quarter of this year, will require approval from 75 per cent of Aegis’ shareholders when it is put to the vote on 16 August.
GLOBAL AD GIANTS BY 2011 REVENUE
DENTSU & AEGIS £3.8bn