Aegis agrees £3bn takeover by Japanese Dentsu

British marketing group Aegis has agreed to be acquired at an eye-popping valuation of £3.16bn, creating the largest communications group in Asia.

by Michael Northcott
Last Updated: 19 Aug 2013

In a game-changing deal for the global communications and advertising industry, British agency Aegis and Japanese rival Dentsu are to become one. The deal pays Aegis a 48% premium on its current market capitalisation. The Yohji Yamamoto suits and designer underpants of Aegis execs have obviously caused a stir over in Tokyo. The deal is not a complete takeover though: Dentsu acquired a 15% stake from French billionaire Vincent Bollore, who has agreed to sell a possible 5% more stock at a later date. There is also the potential for Dentsu to buy about 10% from ordinary stock, which would take its share to a total 30%.

With such an enormous premium, Dentsu must have been really keen to seal this deal. But why? Well, Aegis employs around 12,000 people in 80 countries around the world, which will mean adding more than 50% to Denstsu’s current roll of 21,000. Furthermore, Aegis is getting some serious traction in North America and is a prominent leader in Europe and Australia. Dentsu, on the other hand, has a much more Asia-focused effort and is looking to spread its wings around the globe. Such a large-scale consolidation will also form the largest media group in Asia and the second largest in Western Europe. 

The chief executive of Aegis, Jerry Buhlmann, said: ‘Together, we have strengthened investment capabilities as we work to help more clients than ever before navigate the complex and converging media ecosystem.’ You can tell he’s in marketing, right? The deal is a cracker for Aegis, though – and shareholders know it. The share price of Aegis, which is a FTSE 250 constituent, jumped 46% this morning thanks to the premium paid by Dentsu.

The advertising and marketing industry seems to be bucking the trend of global economic gloom of late, as Martin Sorrell’s WPP has also enjoyed strong results in recent months. So whilst companies all over the world are having a tough time thanks to economic conditions, it seems many will still pay the ad guys a pretty penny to stay looking slick…

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