After Closing Deal to Sell Synovate, Will Aegis Go Into Play?

Ipsos Buys U.K. Group's Market Research Division for $862 Million

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Aegis Group has sold its market research arm Synovate to French group Ipsos for $862 million, concluding talks that began in June and prompting immediate speculation that Aegis itself will go into play and could be a good fit for one of the big agency-holding companies.

The sale leaves Aegis Group focused entirely on media buying and digital marketing. The group's main businesses now are media-buying networks Carat and Vizeum, digital network Isobar, out-of -home specialist Posterscope and digital search company iProspect.

"We are stronger today than we were yesterday," Jerry Buhlmann, CEO of Aegis Group, said in a conference call with journalists this morning. He avoided questions about the slimmed-down Aegis Group's new vulnerability to a takeover, but did admit that as a "public company, it's always a possibility."

In a statement about the sale of Synovate, Citi Analysts said, "We do believe that the sale of Synovate could trigger interest in Aegis Media. Vincent Bollore [Aegis' largest shareholder, with a 26.5% stake] has commented that his stake in Aegis is not core and we believe Aegis Media's assets are high quality and could be of interest to Publicis, IPG and Omnicom."

Publicis Groupe said that when asked about Aegis during Publicis's first-half earnings call last week, Chairman-CEO Maurice Levy responded that his company is watching the situation but is not interested in acquiring Aegis. The company declined to respond to the Citi Analysts statement today.

Aegis is currently No. 6 in Ad Age 's ranking of the world's top 50 agency companies, with worldwide revenue of $2.26 billion in 2010. Synovate accounted for $885.4 million of Aegis Group's total revenue in 2010, according to Ad Age 's DataCenter , so a slimmed-down Aegis is likely to be overtaken in the rankings by Havas, currently No. 7.

Mr. Buhlmann said that Mr. Bollore, who is also chairman of French rival Havas, has made an "irrevocable undertaking" in favor of the sale.

However, Mr. Buhlmann preferred to talk about how he will lead a "much more focused" Aegis Group and "accelerate development" of the business. He said, "[This sale] enables the group to increase its focus on delivering communications services based on media, digital and content creation."

Aegis will give $340 million -- about 40% of the sale proceeds -- to its shareholders by issuing a special dividend.

With $522 million in the bank, Mr. Buhlmann said the group is looking mainly for small- and medium-sized acquisitions, but is open to larger deals if the right opportunity comes up.

Mr. Buhlmann added in a statement that the deal "represents the largest structural change in the history of Aegis Group. ... For Aegis shareholders, the offer from Ipsos provides value and certainty. ... Aegis Media's strategy is based on capturing organic growth from the rapidly changing media market. The outcome of this transaction will enable us to accelerate the delivery of that strategy and focus our resources on value-enhancing acquisitions to support us in driving sustainable profitable growth."

A majority of Aegis's shareholders must approve the deal at a vote in August before it can be finalized.

The sale does not include Aztec, the Australian research company that scans data at checkouts, a 2005 acquisition by Aegis that had been part of Synovate. Mr. Buhlmann said that Aztec wasn't for sale because of its synergies with Aegis Media.

Ipsos will jump from being the world's fifth-largest market research company to No. 3, said Didier Truchot, Ipsos co-president, in a statement: "This deal will meet our goals to make Ipsos a worldwide brand, synonymous with excellence in each of its fields of specialization and better able to attract and keep clients." The deal will be funded through a combination of borrowing and a new rights offering.

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Contributing: Kunur Patel

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