Said Tadashi Ishii, Dentsu's president and CEO: "Dentsu and
Aegis will be the market leader in the Asia-Pacific region,
enjoying a strong presence across Europe and the fastest growing
agency network in the US. ... Jerry and I have huge ambitions for a
truly client-focused global communication network built in the
digital age, and are looking forward to further innovating our
business and continuing to contribute to our clients' success."
Combined, Dentsu and Aegis' clients include about 75 of the top
100 advertisers in the world, company executives said on a
conference call with reporters.
Vincent Bollore, Aegis Group's largest shareholder with a stake
of nearly 30% in the business, sold half of his shares to Dentsu
and agreed to sell a further 5% stake. The deal started when Dentsu
approached Aegis' management, who introduced Mr. Bollore to the
Japanese company's executives later in the discussions, said Tim
Andree, senior VP of Dentsu Inc.
Traditionally known as a Japanese agency network serving
Japanese clients at home and abroad, Dentsu has taken clear steps
to establish overseas footholds as Japan faces dim prospects for
long-term domestic growth.
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Mr. Andree, an American with extensive experience living and
working in Japan, leads Dentsu Network, an entity that includes all
agencies in markets outside of Japan. Under Mr. Andree's guidance,
Dentsu has acquired top-quality U.S. shops including McGarryBowen,
Attik, Firstborn and
360i and its parent
Innovation Interactive.
Though Dentsu has been aggressive about overseas growth,
business outside of Japan composed only 16.2% of its revenue in
2011, up from 12.8% in 2006. Dentsu's percentage of revenue from
the U.S. jumped to more than 6% in 2010 from 1.5% in 2006.
Mr. Andree defended the hefty price tag on the Aegis deal. "It's
a full but a fair price for a company that is performing at the top
of the industry in both growth and margin, and the composition of
the company that is digital. ... We're confident in the future of
the business."
He also denied that such an acquisition was meant to be a
challenge to competitor WPP. "We believe if we focus on our clients
and the ability to provide them with more capabilities and more
services in more markets and do that with best-in-class offering,
the competitive dynamics will take care of themselves. We don't
focus on scale or size or growing against any particular group, the
results will take care of themselves if we focus on our
clients."
Dentsu received a cash infusion in February this year, when it
ended a relationship with Publicis Groupe. The
Paris-based holding company bought back 18 million of its own
shares from Dentsu for $848.5 million.
Aegis includes five network brands -- Carat, iProspect, Isobar, Posterscope and Vizeum. Its 12,000 employees in more
than 80 countries will join Dentsu's 21,600 staffers. Dentsu has a
presence in 29 countries.
No changes to the management structure were expected at Aegis,
Mr. Buhlmann said, adding that he and top executives intended to
stay in place until at least the end of 2013.
Aegis saw 20% revenue growth in 2011, ending the year with $1.5
billion. Carat won the nearly $4 billion GM global media account
earlier this year.
The cash offer will need 75% shareholder approval in a vote that
will take place on Aug. 16.
Citi points out in an analyst note that this deal may have
implications for Mr. Bollore's Havas. "For Havas, given it is 30%
owned by Bollore and this deal leaves it as the remaining smaller
global agency network, this may be viewed as the next potential
target in the global agency space," the bank wrote in an early
morning analysis of the Dentsu-Aegis deal.
Emma Hall in London contributed to this report.
