Not the 'Big Four' Holding Firms in Adland Anymore -- Now It's the Big Five

Dentsu-Aegis Deal Expected to Close in Fourth Quarter of 2012

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Dentsu's $4.9 billion acquisition of Aegis Group is easily among the biggest transactions in agency history -- elevating the positions of both the 110-year-old Japanese company and the British media and digital network.

And it's not just about the massive price tag of the deal -- it's about its magnitude. After all, while the purchase of global agencies is a regular occurrence, the coming-together of two ad holding companies is far more rare.

While the pairing of Dentsu and Aegis doesn't unseat any of the established Big Four agency companies by global revenue -- that would be WPP, Omnicom Group, Publicis Groupe and Interpublic Group of Cos, in that order -- what it does mean is that adland should now consider the playing field in terms of the Big Five.

Notably, it pulls Dentsu closer to those four agency leaders and further from the rest of the pack, which includes Havas and MDC Partners. (Below, see how Ad Age stacks Denstu's big deal against those of its competitors since 2000.)

Here's a bit on the deal by the numbers: Combined global revenue for No. 5 Dentsu and No. 8 Aegis was $5.89 billion in 2011. The combined entity would still remain the fifth-largest agency holding, behind No. 4 Interpublic's more than $7 billion in global revenue. But after Dentsu, the next-largest holding company is French-owned Havas, with just $2.29 billion in global revenue.

Vincent Bollore -- who's long been one of the most powerful admen in the business, with huge ownership stakes in both Havas and Aegis Group -- has been the largest shareholder in Aegis, with a stake of about 26%. When Dentsu officially inked a deal last night, it purchased about 15% of his stake, which is the most it was permitted to acquire at once per certain antitrust rules. Dentsu has an option to take 5% more pending approval. That will leave Mr. Bollore with 6% of Aegis until its shareholders meeting in August, at which time he is expected to vote his shares to Dentsu.

The deal is expected to close late this year, and then comes the big challenge: integrating the two massive companies in order to take advantage of any synergies for clients while accounting for where there could be any overlaps between the two groups.

Combined, the companies' total number of clients will amount to somewhere around 11,000; geographically speaking, Dentsu-Aegis will have operations in some 80 countries.

According to Dentsu Network President and CEO Tim Andree, the goal -- in keeping with the Japanese company's acquisition strategy in the West so far -- is to maintain the identity of each of the main brands that sit under Aegis Group, which include Carat, Isobar, IProspect, Posterscope and Vizeum.

"Our plan is to keep the five brands of the Aegis group operating," and "not to alter any of the brands," Mr. Andree said. "If you look at our past history, we don't come in very often and change existing brands." The companies that Dentsu has focused on acquiring in the West so far, McGarryBowen, 360i and Firstborn, all have kept their identities, and if anything, in the case of McGarryBowen, that brand has taken over Dentsu offices in Europe.

"We don't think there's a lot of internal overlap and competition between the brands," said Mr. Andree. He added that although the massive deal is one of a scale that hasn't been seen in many years, scale is secondary to acquisition of strategic offerings that Dentsu was looking for.

"We're not pursuing a strategy of scale for scale's sake -- that 's the old-style holding company model."

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