Bollore: Agency Provocateur

He's a Wild Card Who Could Reshape the Business. But What's His Endgame?

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NEW YORK ( -- Part of Vincent Bolloré's media empire -- a TV station, a radio station and two newspapers -- is stuffed into three floors in an unspectacular office building just across the Seine from Paris, in a suburb called Puteaux. One afternoon in March, Mr. Bolloré led a few visitors on a whirlwind tour through his collection of media outlets, striding briskly and dispensing a bonjour here, a ça va there to the hired young hands.
Vincent Bollore
Vincent Bollore Credit: Sipa

On the fourth floor, standing amid a bank of Mac workstations manned by people producing his free afternoon paper, Direct Soir, Mr. Bolloré observed, "They look to be doing nothing, but they're putting out the paper."

Later, while Mr. Bolloré was bounding down a stairwell with plaster chipping off the walls, the topic was his friend Rupert Murdoch, whom Mr. Bolloré mistakenly insisted is wedded to a paid model for his newspapers. (In fact, Mr. Murdoch's News Corp. publishes The London Paper, a free sheet.) When it comes to media and advertising, he said, "I know 10% of what I should."

That's an interesting statement coming from the man who has arguably become the leading protagonist in the final phase of the two-decade-long big bang that's consolidated the marketing-services business, l'homme who will decide the futures of Havas and Aegis Group and, perhaps indirectly, even Interpublic and Publicis Groupe. Still, the knowledge gap is forgivable when you consider his newness to the business and that in the vast scope of his holdings, his media and advertising business has the feel of a well-tended model train occupying a central place in a large mansion. It is a conversation piece, a bright, shiny, relatively new thing that grabs attention, but it is not the main event. That would be the amazingly diverse collection of businesses Mr. Bolloré began accumulating in 1981, when, as a junior investment banker, he bought a paper company begun by his family back from Edmond de Rothschild for a single, symbolic franc.

From there, Mr. Bolloré added a shrink-wrap-plastic operation, a tobacco company and a fuel-distribution business, among many others. And he came to notoriety buying and selling large stakes in great French companies such as Bouygues, Pathé and Lazard Frères, earning him both an enormous personal fortune and a reputation in business circles as someone to be feared. His formula has been to buy large chunks of shares of ailing companies, agitate for change and then sell when the stock price rises. In 2007, Forbes listed him as 458th-richest person in the world, with a net worth of more than $2 billion.

Long-term investor
Whether Mr. Bolloré is a corporate raider is a question that's still rehearsed from time to time. He doesn't like the term. In an interview with The Financial Times, he said he preferred brocanteur, which translates to a dealer in secondhand goods. Corporate raiders are generally defined by the short-term nature of their investments. They hang around only long enough to make their profit and get out, often leaving chaos in their wake. But Mr. Bolloré's at least as much an industrialist as he is a raider, with deep, long-term investments in areas such as paper, which his family got into back in 1822, or capacitors, an area of interest that's nearly 25 years old and has led to a new venture making batteries for electric cars.

All in all, Mr. Bolloré's profile is a complicated one that has led to much head scratching in the ad industry on both sides of the Atlantic. It particularly unnerved many at Havas, the great French owner of ad agencies, when he took control of the company in 2005 in a boardroom coup. Havas is generally believed to be in a better situation today than when Mr. Bolloré, now its chairman and largest shareholder, took over. In rather short order, he took a wheezing giant of French business, one that had been gut-punched by a string of bad acquisitions, and gave the operation stability and, insiders say, confidence. He restored organic revenue growth and pared down debt.

However, Havas shares, down more than 30% in the period, have yet to benefit, and there are still big holes in Havas' portfolio of agencies. Its media-buying operation is largely regional and is dwarfed by rivals that achieved global scale long ago. And Havas' overall offering is weak in all-important geographical areas such as the Asia-Pacific region, where so much future growth in the ad business will happen.

In terms of strategic importance, Havas is the seventh-largest player, its $2 billion in annual revenue a drop in the bucket compared with giants such as Omnicom and WPP or Paris-based Publicis, with which Havas has a bitter Gallic rivalry that goes back decades. It's hard to imagine that sits well with a man like Mr. Bolloré, and that discomfort, not to mention his rivalry with Publicis Chief Maurice Levy, has the potential to be one of greatest forces of change in the ad-agency business today.

In immediate terms, a big step toward fixing some of Havas' issues would be an acquisition of Aegis Group, the London-based media and research firm in which Mr. Bolloré is the largest shareholder, with a 29% stake. Despite his interest, which has crept up since 2005, Mr. Bolloré has had a tough time getting a deal done. At Aegis' annual investors meeting on Friday, he failed for the fifth time to get two board members elected, something that's been opposed by Aegis management on the grounds that it would be akin to having rival Havas sitting in on internal deliberations.

'Long love affair'
Attendees at the meeting heard from Clive Sasserath, who described himself as an "ordinary shareholder." He stood up to ask the assembled Aegis board whether there were "any means at our disposal to stop the total farce of the French shareholders constantly trying to appoint two directors to the board."

Mr. Bolloré is either sanguine or arch when it comes to Aegis, the central siege in his storming of the ad world. Asked about the company's strong 2007 results, which had just been released when we met back in March, he took a sarcastic tone, describing them as "breathtaking, astounding, amazing." There is no indication that the quest, going into its third year, is proving a frustration.

"It's a long love affair that we have had," he said, with a tone, oh so French, suggesting that consummation is inevitable.

Mr. Bolloré, 56, both a yachtsman and comic-book collector, is fit, tanned and rested-looking. On that March afternoon, he ushered his visitors warmly into his 17th-floor office. "It's an honor. Really. I mean that," he said, welcoming us into a room whose most ostentatious feature is a jaw-dropping view of Paris. Otherwise it's filled with mementos, such as a photograph of his father with Georges Pompidou and a dense, heavy brick of shredded francs. Throughout the interview, he sipped on bottles of Evian, and before he removed his navy-blue suit jacket, he asked for permission. Mr. Bolloré had none of the tight-lipped reserve of most prominent executives when they deal with reporters, a fear of saying something wrong that leads to carefulness and often severe boredom. He is somehow open without being revelatory, and he is charming, with intense flashes of charisma.

It is not difficult to picture him in 1981, standing on a crate in a paper factory in Quimper, having just repurchased his family's ailing company, asking workers to take a 15% pay cut as part of a restructuring, a concession he won. Similarly, it doesn't strain the imagination to see him, nearly 25 years later, taking the stage at a Havas investors meeting to declare he "is not Darth Vader."

Above analysts, investors
Mr. Bolloré is ironic and sarcastic and always difficult to read, an inscrutability made not only possible but easy by his wealth and status. He hobnobs with Nicolas Sarkozy, a friendship that brought him into a low-flame scandal last year when his loan of a yacht to the French president sparked cries of conflict. The unique structure of his group also allows him to ignore external perceptions. Bolloré Group is large, with 6 billion euros in annual revenue, and influential in a number of industries but still closely held. As a result, Mr. Bolloré is not answerable to analysts, nor does he have to deal with noisy investors who make problems for management -- which is to say he doesn't have to deal with people like himself.

By the early part of this decade, he'd become known as the scourge of genteel French companies that were big and slow. He's always described his raiding as a diversion from his industrialism, like an incredibly lucrative hobby, but that didn't stop him from being dubbed "a killer" by BusinessWeek in 2001. During the Lazard saga, he was quoted as saying, "Let's say that no one had ever dared to behave so rudely to [Chairman Michel] David-Weill until I came along."

In his short time in the ad world, he's already been up for a little rough play. For instance, his relationship with Mr. Levy, the chairman-CEO of Publicis Groupe, has gone south, something both men acknowledge even if they don't say why. Some say part of the damage was done by speculation in early 2007 suggesting that Mr. Bolloré was gearing up to take a run at Publicis. It came in the form of a rumor, printed by Reuters and others, that Mr. Bolloré was interested in purchasing the large swath of Publicis shares owned by Elisabeth Badinter, daughter of founder Marcel Bleustein-Blanchet, in whose pool Mr. Bolloré swam as a boy.

"He smiled, and now he doesn't," Mr. Bolloré said of Mr. Levy. "We don't see each other." Asked about this, Mr. Levy responded with a brief e-mail message: "VB is a very good and strong competitor. We used to be good friends, but things have changed since he took control of Havas."

Mr. Bolloré's approach to Interpublic has been a different matter entirely. In late January, after visiting a factory outside Montreal that's supporting his electric-car project with Pininfarina, Mr. Bolloré stopped in New York, where he met Interpublic Chairman-CEO Michael Roth. Since Mr. Roth took the reins of Interpublic in 2005 with the mandate to pull it out of its intense operational and financial difficulties, there has been near-constant chatter about whether the former insurance-industry executive will try to sell it or break it up. Scenarios broached by people from both inside and outside the company have ranged from privatization to a merger with Publicis. While Mr. Roth has made strides toward stabilizing the company, its stock has struggled to gain traction. In the past year, it has bounced between $7 and $12. In short, Interpublic is exactly the kind of target Mr. Bolloré likes, probably all the more so with the strength of the euro against the dollar and the draining of the pool of available credit, which might scare off other potential suitors.

Interpublic uncertainty
During our hour or so interview, Mr. Bolloré brought up his meeting with Mr. Roth, though he didn't characterize what was discussed. He said he wasn't sure whether he'd pursue Interpublic, deflecting the question to David Jones, global CEO of Euro RSCG, Havas' largest unit, who was seated on a couch nearby. Mr. Roth, he said, "seemed a little anxious. He's doing a good job."

One person close to Mr. Bolloré described him as "lukewarm" on the Interpublic matter. A complete mashup would seem to be, to use a word from Mr. Roth, far-fetched. A more likely scenario might see Mr. Bolloré trying to take a stake in or a part of Interpublic as a way of quickly bulking up Havas, which has only one global ad-agency network. Its larger rivals each have three or, in the case of WPP, four, which gives them more options when it comes to pursuing the business of global marketers. Some saber-rattling might also have the effect of pushing the hand of Publicis, which in the past has considered a bid for Interpublic.

Asked to respond, Mr. Roth had some stern words for Mr. Bolloré. "I agreed to see him at his request and purely as a personal courtesy," he wrote in an e-mail. "We talked about the industry overall and some of the challenges he is facing with Aegis. IPG is totally focused on continuing to build on our improved performance and delivering against our 2008 targets. We won't be distracted -- nor are we concerned -- by these types of far-fetched insinuations."

The place where Mr. Bolloré is causing the most trouble is, of course, Aegis. The saga began in 2005, when Mr. Bolloré's share in Aegis became public at roughly the time he began making moves at Havas. Mr. Bolloré has said that Aegis management first came to him to discuss a merger of Havas media buyer MPG with Aegis, but as his stake grew, the relationship dimmed. Around that time, Publicis and WPP both showed interest in Aegis but then backed away. With 29% of the company's shares, Mr. Bolloré has yet to make a bid, though he will have to do so by U.K. law if his stake in Aegis ticks up to 30%. Aegis is a ripe target for a few reasons. First, it's a well-run company with strong margins, and it's free of what many view as the legacy business of the traditional ad agency. Its holdings in media and digital marketing services and research are all in high demand right now. Plus, as one of the few midsize players, it's seen as vulnerable in an industry long bent on consolidation.

As a result, many industry observers see an acquisition as a fait accompli. WPP Chief Executive Martin Sorrell recently predicted that an Aegis takeover would happen by the middle of this year, though Mr. Sorrell could stand to gain if, as many predict, he ends up taking Aegis research unit Synovate off Mr. Bolloré's hands. Mr. Bolloré owns about 12% of Harris Interactive, a company many believe could fill the gap left by a Synovate deal.

We're fine, thanks
Aegis, however, balks at any suggestion that a deal is inevitable. "We have outgrown the market for 11 years," an Aegis spokesperson said in an e-mail. "In 2006, 2007 and so far in 2008, we've had the best organic growth of any major competitor. We've won clients like GM, Johnson & Johnson and Mattel. Our media margins are best-in-class. [Digital agency network] Isobar is the envy of the industry. Meanwhile, Synovate, now 5 years old, has outpaced the market almost twofold since launch. Does it really look like we need a deal to succeed?"

There is some independent backing for Aegis' position. In the past couple of months, two research reports, one from Citigroup and the other from Deutsche Bank, were bearish on an Aegis-Havas merger, with Citi saying it makes "limited sense." Deutsche Bank took the position that Havas would have much more to gain from a deal than Aegis would.

These positions, however, will matter little if Mr. Bolloré decides he wants Aegis. What's stopping him, according to people familiar with matter, is price. Aegis management is said to want a buyout at a price of 180 pence ($3.57) a share -- a valuation backed by some analysts -- while Mr. Bolloré won't pay more than 120. (Neither side would comment on those figures.) Aegis shares have ranged between 93 and 155 pence in the past year.

In 2022, the 200th anniversary of a family business that was founded in Brittany, Mr. Bolloré will retire. "Save the date," he said. "There will be a big fiesta." If the lore around him is to be believed, he wants to hand down a strong collection of media and advertising assets to his sons, who are rumored to be less than eager to assume day-to-day responsibility over fuel and batteries and are much more enamored with media. Three of them work in various roles in Bolloré Group's media-investment arm, while the fourth works in another part of the group. For this hand-me-down to happen, Mr. Bolloré's investments in ad agencies, film, newspapers and TV stations would, in the end, be long-term.

That would mark the triumph of an unusual ownership model, at least in Western business: a collection of media and advertising assets uniting buyer and seller under the shade of one very large umbrella. Mr. Bolloré sniffs at suggestions that this will yield a conflict of interest, and he is perhaps right to do so. In global terms, his media possessions are tiny. Even within Bolloré Group, they account for only 1% of revenue. Moreover, his holdings are decentralized, "like a gypsy camp with a common kitchen and hospital."

Mr. Bolloré was a bit cagey about the inheritance question, saying the above scenario is about "half right." As he ticked off facts and figures about Bolloré Group -- it's responsible for the paper for 60% of the world's Bibles and Qurans and 90% of its boarding passes -- he was clearly proud of the output of most of its component operations. But he seemed more excited by media, and at times the rest of the conglomerate came off as important and well-functioning but not particularly worth talking about, like a pacemaker that does nothing less than keep blood pumping through a body. "It's complicated but efficient," he said of the conglomerate. On his heating business: "When it's cold, it is very good for us. It's not a clever business. If you don't kick the dog or break the flowers, they call you back."

In the past three years, Mr. Bolloré has done much to convince people both inside and outside of his organization that he'll make that kind of commitment.

He still has his skeptics. One industry executive who's met him a few times and who's heard the 2022 tale said, "He's very disciplined, very focused and very impressive, but he's a corporate raider, and you have to know he can turn around at any time and sell it all."

But there are also some very important people convinced of his commitment. One of them is WPP's Mr. Sorrell, who despite being a rival is responsible for some of Mr. Bolloré's best press. The two are said to be close, and the mutual admiration comes through clearly in public statements. Here's Mr. Sorrell in the U.K. trade magazine Marketing Week, pulling off a rhetorical stratagem that, like the Swift Boat attack on John Kerry in the 2004 presidential election, does the trick of turning perfectly good experience into a liability: "It's the old [legendary soccer coach] Bill Shankley thing: 'Football's not a matter of life or death; it's much more important than that.' I think Vincent Bolloré would share that same motivation. Maurice Levy? It's a job. He was the chief information officer in Marcel Bleustein-Blanchet's empire. [Omnicom CEO] John Wren the same: It's a job."

Mr. Bolloré returned the favor: "Martin is very good. I try to copy from the good guys. He's very clever and intrigued by me maybe."

Another person Mr. Bolloré has succeeded in convincing is David Jones. In June 2005, Mr. Jones, then chief of Euro RSCG's New York agency, traveled to Paris to meet Mr. Bolloré for the first time. By his own admission he was skeptical that Mr. Bolloré was ready to make a long-term commitment.

At the meeting, as he recalled, Mr. Jones expressed his belief in Havas' future. Mr. Bolloré replied, "Yes, David, so do I. That's why I put all that money in."

Mr. Jones, global CEO of Euro RSCG, said Mr. Bolloré, with whom he shares near daily text messages and a meeting every other week, has followed through. As evidence he cited a decision in 2006 to sacrifice the year for Euro's London agency, allowing it to run at a loss while new management was put in place.

"Had we been running the agency the way most holding companies insist you run businesses, we would have never done what we did in 2006," Mr. Jones said in a recent interview. He said Euro was the fastest-growing multinational agency in London the next year. The capital allowed Mr. Jones to buy digital shop Kadium and merge it with Euro's San Francisco agency. Other deals could follow, especially in digital, health care and, in geographic terms, Asia.

There are other, smaller bits of evidence, too, such as the fact that Mr. Bolloré maintains an office in the Havas headquarters.

Uncertain times
But when addressing the question of his commitment to the ad business, it's worth noting that no one knows what the business will look like 14 months from now, let alone in 14 years. In mature economies, ad agencies are struggling to understand the digital media that are reshaping the way consumers receive communications and interact with brands. Tech giants such as Google and Microsoft cast great shadows over the established agency business. And none of the major holding companies, with the possible exception of WPP, have figured out emerging markets such as China and India.

For now, the quartet of companies that dominates the industry does not include Mr. Bolloré's. A deal with Aegis likely would make him only the fifth-biggest player. It'd vault him past Dentsu but wouldn't even give him the upper hand over Mr. Levy, let alone create a new world order. Only time will tell how that will sit with a man used to dominating the markets in which he operates.

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Contributing: Emma Hall
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