Bolloré Likely To Find Aegis More Elusive Than Havas

It was almost a year ago that French entrepreneur Vincent Bolloré took control of Paris-based holding company Havas at its annual meeting with just a 22 percent ownership stake in the company. Ever since, he’s been buying up shares of Aegis, and now owns a 29 percent stake entering next week’s annual meeting. But industry watchers say that’s where the similarities end, despite Bolloré’s intentions.

Analysts and sources close to Aegis say that due to the stricter regulations governing public companies in the U.K., coupled with Aegis’ stronger financials (up 16.5 percent in revenue in 2005, compared to a 2 percent revenue drop for Havas), Bolloré will have a much tougher time controlling the London-based owner of agency Carat without the company’s blessing and with less than a one-third ownership stake. According to UK securities law, he must make an offer for the entire company if he reaches the 30 percent threshold.

Bolloré, seeking an alliance between Havas and Aegis, has proposed electing members to the Aegis board of directors. The Aegis management has rejected the board proposal, as well as any alliance, and strongly urged shareholders to do the same.

“We expect Bolloré’s resolutions not to pass” at the June 14th annual meeting, wrote Delphine Dahirel, a research analyst with the French investment company Exane BNP Paribas, in a report issued last week. “He will have to buy the company if he wants to develop synergies with Havas.”

Sources say that Bolloré has not discussed purchasing Aegis outright. Last year, he discussed the possibility of teaming with WPP and San Francisco-based investment banker Hellman & Friedman to buy Aegis, but the talks broke off. Earlier this year during an analyst call, WPP CEO Martin Sorrell confirmed that his main interest in Aegis was to acquire its research arm Synovate, and that he was still interested in possibly acquiring it. WPP declined comment last week.

Publicis Groupe considered purchasing the company last year but also opted not to go forward. The company last week had no comment.

Aegis has publicly rejected Bolloré’s proposal to nominate two members to the Aegis board. “It’s ludicrous,” said a source close to the company. “It’s like Pepsi nominating members to the Coke board. The companies compete throughout Europe and in the U.S. Do you really want information siphoned from one boardroom to another about tactics, terms, strategy for clients and acquisitions?”

Aegis has been aggressively pressing its case to shareholders that teaming up with Havas is a bad idea. “Look, at the end of the day, the question comes down to what’s in it for Aegis shareholders,” said one executive. “Since Bolloré took over Havas, the return to shareholders, based on share price and dividends, has been negative 19 percent. Obviously, he has a lot to gain. In the same period, the return to Aegis shareholders has been plus 40 percent. That’s a value gap of 60 percent.”

Deutsche Bank analyst Patrick Kirby agreed. “An Aegis alliance with Bolloré would clearly help stabilize Havas,” he said. “However, this is not a necessary or desirable deal from Aegis’ perspective, and the prospect of Aegis being steamrollered into a strategic combination with Havas appears remote.”

Bolloré did not return calls.