The Future Of Aegis, Bolloré Or Not

Shortly before Havas chairman Vincent Bolloré was rebuffed last week in his second attempt to get representation on the board of Aegis, Exane BNP Paribas analyst Delphine Dahirel wrote that the French investor would “have no choice but to launch a takeover bid” for the media specialist if he wanted to get the most value for his holdings.

Indeed, Bolloré, who also owns 29.1 percent of Aegis, has made no secret of his interest in combining the two companies. But with both recording year-to-date profits and new business wins this year, it’s not difficult to understand why many in the financial community believe that London-based Aegis Group, the subject of takeover talks for almost two years, will be acquired soon, and not necessarily by Bolloré. Some believe it could happen early next year.

Dahirel wrote in an Aegis report that she expects Bolloré to make a move to acquire the Carat parent “in the next few months.” Separately, Collins Stewart analyst Simon Wallis last week downgraded his Havas rating to a “sell,” while urging investors to buy Aegis in anticipation of its being acquired. “We believe that Bolloré will try to use Havas to buy Aegis,” Wallis wrote.

After the shareholder vote last week, Bolloré told reporters that all options remained open, including a possible bid for the 70.9 percent of Aegis that he does not own. But he did not comment specifically on when or even if he would make such a bid.

Bolloré is not the only one who has expressed an interest in Aegis. Publicis CEO Maurice Lévy said earlier this year that he was still interested in exploring a possible bid for the media specialist. Talks last year with Aegis along those lines broke off without a formal offer from the Paris-based holding company. But within the last month, Lévy stated publicly that Publicis, which analysts say has one of the strongest balance sheets in the industry, was interested in making a major acquisition, although he did not specifically mention Aegis as a target.

Publicis declined to comment last week. One source close to the company, however, said that Publicis was watching the situation, but had not made a fresh offer and that no new bid was imminent. In fact, some bad blood was created between Lévy and Bolloré last month when the latter invested in a new agency created by three defecting Publicis executives, Christophe Lambert, Frédéric Raillard and Farid Mokart.

Meanwhile, WPP CEO Martin Sorrell has also kept the industry guessing about his continued interest in Synovate, the well-regarded consumer-research arm of Aegis. Last year, WPP teamed with private equity firm Hellman & Friedman, San Francisco, to explore a joint acquisition of Aegis under terms that would give Synovate to WPP while the equity firm would have acquired the rest of the company. The partners held talks with Bolloré about joining in the bid, but they fizzled, and an offer never materialized.

Richard Hitchcock, media analyst with Numis Securities, said Bolloré continues to hold a “powerful card in deciding what the future of Aegis is going to be,” because with a greater than 25 percent stake in the company, he has veto power over any acquisition deal.

But all the speculation about its future hasn’t hindered Aegis’ performance this year. In its first-half earnings statement, the company reported record profits of $82 million, up 15 percent, and record new business wins totaling $1.3 billion in billings. In the last two months, the company has been on a hot streak, winning two big European accounts, General Motors ($750 million) and Dell ($200 million) as well as Wal-Mart ($570 million) in the U.S., bringing its year-to-date new business tally to more than $2.6 billion.

The company has also lost a handful of accounts, including CBS ($130 million), Amp’d Mobile ($50 million), Gateway ($42 million), the U.K. business for Groupe Danone ($42 million) and the European account for consumer electronics manufacturer Bang & Olufsen ($42 million). Also at risk are Royal Philips Electronics ($600 million), which is under review, and Pfizer Consumer Health Care ($450 million), which is being acquired by Johnson & Johnson. But net new business exceeds $2 billion, sources said.

Aegis officials weren’t commenting last week about the likelihood of new bids for the company. A source close to the company said there has been very little dialogue between the Aegis and Bolloré camps.

Aegis Chairman Lord Sharman issued a statement last week after shareholders rejected Bolloré’s second bid for board seats. “Board representation for a shareholder with close connections to a competitor is simply inappropriate,” he said. “We hope that Group Bolloré will respect the views of the clear majority of Ageis shareholders voting today.”

A Bolloré representative declined to comment on the possibility that he would move shortly to acquire the rest of Aegis. As to the shareholders, the rep said, “We are not surprised at the result, but our demand remains reasonable.”

A demand for yet another vote on the matter may come after the new year, he said.