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Aegis Sets Stage for Showdown

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NEW YORK In preparation for a likely battle over control of the company at its June 14 annual meeting, Aegis Group today issued a 16-page letter to shareholders arguing against any business combination with the Bolloré Group and its chairman, Vincent Bolloré, who also chairs competing rival holding company Havas.

Bolloré, who upped his stake in Aegis earlier this week past 29 percent, has been pressing for an alliance between Havas and Aegis since last year, after he took control of the former and began acquiring shares of the latter.

In the letter, Aegis said an alliance with Havas was unjustified from the Aegis shareholder point of view because the benefits would accrue to the shareholders of struggling Havas rather than to Aegis, where operations are running smoothly.

"Havas faces a number of challenges and is performing less strongly the Aegis," the letter states. "This further weakens the potential case for any combination at least from the point of view of Aegis shareholders."

As for a possible combination of media agency assets (Havas' MPG and Aegis' Carat), Aegis argued, "This would only present limited expected benefit, particularly given the structural and managerial complexity that would be involved. It would also reduce Aegis' flexibility with regard to their strategic options." Thus, "the board does not believe that a potential combination or cooperation with MPG forms the basis for a mutually attractive transaction."

In the letter, Aegis charged that Bolloré tried to ram through at the last minute a proposal on May 17 to add two members to Aegis' board without giving shareholders adequate time to consider the measure. (Aegis' meeting was subsequently postponed to June 14 from May 24.)

The Aegis board is urging shareholders to vote against the resolution for those proposed board members, citing the conflict of interest that Bolloré has by controlling Havas and being chairman of that company. "The board will always resist the efforts of any particular shareholder who seeks to exercise any form of undue influence or creeping control over the company without offering a full and fair price to all Aegis shareholders for that privilege," according to the letter.

Bolloré controls Havas with just a 22 percent stake in the company. His 29 percent stake in Aegis is just 1 percent below the threshold where under British law he would have to make an offer for the entire company.

Bolloré representatives could not immediately be reached for comment.