The pecking order of the ad world may have changed overnight: Dentsu announced a stunning $4.9 billion cash deal to acquire Aegis, the world’s largest media independent.
It’s Dentsu’s largest acquisition and, if approved by 75 percent of shareholders as required, parlays the Japanese company into the holding-company big leagues. The combined entity would be the largest player in the Asia-Pacific region and the second-largest in Western Europe, the companies said.
Aegis’s largest shareholder is Vincent Bollore, who owns a majority stake in Havas, and for years it’s been expected Bollore would combine the two companies. But Dentsu revealed it already purchased nearly 15 percent of the French investor’s 26 percent stake and intends to acquire the rest.
Aegis management recommended approval of the Dentsu bid, which is priced at a 48 percent premium over the closing stock price on July 11, the day before the announcement of the bid.
The combination is complimentary and lessens Dentsu’s reliance on the contracting Japanese ad market: In the last fiscal year, Dentsu rung up more than 80 percent of its sales in Japan whereas about 80 percent of Aegis’ 2011 revenue came from outside the Asia-Pacific region.
Aegis’s media holdings include Carat, Vizeum, Isobar, iProspect and Posterscope. In January, Aegis’s Carat unit won General Motors’ $3 billion global media planning and buying assignment. In America, Dentsu acquired agency Mcgarrybowen and digital shop Attik.
The deal comes after Dentsu’s association with Publicis Groupe ended as the Paris company bought back a 9.3 stake after a ten-year strategic alliance between the two businesses never materialized. The stock buyback provided Dentsu with a cash infusion of $848.5 million in addition to the $286 million Publicis paid for a 2010 re-purchase of 3.8 percent of its shares.
In announcing the acquisition, Dentsu president and CEO Tadashi Ishii said: “Together we will be able to deliver fully integrated and best-in-class services to our clients through a new global communications network born in the digital age offering a broadened service portfolio. Dentsu and Aegis will be the market leader in the Asia-Pacific region, enjoying a strong presence in Europe and the fastest-growing agency network in the U.S.”