Agency President Yutaka Narita offered no specific plans on how the company would strengthen its global position, but did say he wants the agency to offer the same level of service abroad as it does in Japan. Dentsu derived 85% of its $14 billion in 1995 billings from Japan with only 2.1%, or $300 million, from the U.S.
Over the past year in the U.S., Dentsu has renamed its Santa Monica, Calif., office Colby Effler & Partners from Rogge Effler & Partners. Later, Hajjar & Partners, Marina del Rey, was made an independent operating unit of Colby, and renamed JSM+ Communications. In recent months, Colby has picked up six small accounts, including KCOP-TV, Los Angeles; La Quinta Resort & Club; and California Pizza Kitchen, following the loss of nearly $70 million in billings during 1996.
TO BE LISTED ON TOKYO EXCHANGE
Dentsu plans to offer the shares in 2001 in its first listing on the Tokyo Stock Exchange and other leading markets.
The giant agency needs the cash infusion to shed its stodgy, Japan-centered business practices and become more agile globally, industry observers noted. Dentsu's inability to effectively take its business overseas and to embrace new media has caused an erosion of the agency's competitive edge, they added.
"Dentsu has dominated the advertising markets in broadcast and print media in Japan for years because of its size, but that will not be enough to keep the firm sharp in the future," one stock market broker said.
The agency also plans to use the funds from the public listing to increase investments in digitalization and to finance a new Tokyo Bay headquarters, set for completion in 2002 at a cost of more than $1 billion.
The public offering by Dentsu, one of the three largest private companies in Japan, is expected to coincide with Dentsu's celebration of its 100th anniversary in 2001. Dentsu officials declined to release information about the size or the exact date of the listing.
In November, Dentsu raised about $748 million in funds when it allocated 260,000 shares to 24 financial institutions. About half of the funds were incorporated into the company's capital while the rest went toward paying for the new headquarters.M
Contributing: Alice Z. Cuneo, Rebecca A. Fannin.