Aegis' Jerry Buhlmann Talks About Sale to Dentsu

CEO Says Conflict Not an Issue; Japanese Ad Giant Was Drawn to Aegis' Fast Growth, Strong Brands

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Japanese advertising giant Dentsu today announced the acquisition of Aegis Group for $4.9 billion, paying a 48% premium to buy the London-based global media and digital communications network. Ad Age 's Europe Editor Emma Hall talks to Aegis CEO Jerry Buhlmann about the deal.

In such a big acquisition there is bound to be client conflict -- not least between Aegis' General Motors business and Dentsu's Toyota client. How will this be resolved?

Jerry Buhlmann
Jerry Buhlmann Credit: Art Beaulieu
Mr. Buhlmann: GM is a global client for us, and Toyota is a Japanese client for Dentsu, so there is very little material conflict. We'll manage conflict the way we do with all our clients -- it's why we have a range of networks. Of our top 30 clients, we have conflicts with all of them. It's not a big issue. We have BMW in many markets, and GM, too. The issue is that clients recognize they are getting access to our expertise and we have an open conversation with them about conflicts.

Will the Aegis sub brands - Carat, Isobar, Vizeum, iProspect, Posterscope -- continue as they are?

Mr. Buhlmann: All the networks will survive. Dentsu has bought into the momentum and structure of the business, with separate P&Ls for each country. The networks will be maintained, as will all our offices.

How will Dentsu and Aegis work together?

Mr. Buhlmann: The key issue is that we share values, and that both our corporate philosophies are about being pioneering. Dentsu's is "Good innovation" and ours is "Reinventing the way brands are built." I've had two months of meeting many [Dentsu execs] and I know our cultures will align. Dentsu is now much more pro-active about developing its business. In the U.S., for example, it has bought McGarryBowen and 360i.

The Dentsu/Aegis network is being sold as "a platform for global growth." How will you go about maintaining growth?

Mr. Bulhmann: We will continue to buy up small and medium-size bolt-ons, and Dentsu's strong balance sheet facilitates that . We will also be able to invest in our business directly, in areas like data technology, and we will develop into each other's networks -- we have a global footprint, and as part of Dentsu we are now more attractive to their Japan-based multinational clients.

You sprung a surprise with this deal. What led up to it?

Mr. Buhlmann: Dentsu approached me a couple of months ago as a credible bidder. They were offering cash, and came to me having thought about it. We agreed not to speak to anyone else and went into bilateral talks with them. In the course of the process we introduced Dentsu to our biggest shareholder, Vincent Bollore, and they dealt directly with him. Over the last 12 years I've talked to most [agency holding companies] in one form or another, but there's never been anything as serious or credible. Dentsu was compelling.

You got a very good price for the business. Why did Dentsu pay so much for Aegis Group?

Mr. Buhlmann: Our organic growth is twice the rate of our competitors [roughly 8% vs 4%]. We disposed of Synovate and redeployed the capital into 24 acquisitions. Of our revenue, 37% comes from digital, and 35% from the faster-growing regions. In the last two years we've won $6 billion in new business. Dentsu is accessing our growth, momentum and revenue. The yen is extremely strong, which helped.

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