In its first serious effort to challenge the bigger media
agencies, Japanese media conglomerate Dentsu is buying out
UK-based Aegis Media Group for a whopping $4.9 billion.
the acquisition fever gripping the top media agencies, Dentsu's
buyout of Aegis will place the Tokyo-based agency in the top
position in the Asia-Pacific region while it becomes the second
largest in western Europe, the fastest growing in North America
and a global leader in digital markets.
deal will also have India implications where Dentsu had expressed
its ambitions to grow. In January 2011, it had bought out
its local joint venture partner to take full control. The
price: $2.4 billion for Sandeep Goyal-promoted Mogae Media's
26 per cent stake each in Dentsu Communications, Dentsu Marcom
and Dentsu Creative Impact.
and Aegis independently were not too big a force in India.
But the combined strength will provide the muscle power for
them to build and grow strong in one of the fastest growing
ad markets in the world," said a top executive in a leading
agency on condition of anonymity.
When contacted, both Dentsu and Aegis declined to comment
on the deal.
source, however, said the details would emerge only after
the deal was consummated and complete. The entire realignment
would follow after that, expected around April 2013. The first
stage would be restructuring globally, followed by specific
regions and then each country.
expects the scheme of arrangement to become effective during
October - December 2012, subject to anti-trust clearance and
dependent on the home market for clients, Dentsu had earlier
in its medium-term plan stated that it would focus on global
business expansion and intensify its digital offerings while
strengthening its mass media business.
initiated talks with Aegis in June, eyeing the agency which
analysts had speculated would look for a buyer. The selling
of the Synovate unit to France's Ipsos was only to make that
task easier for a suitor.
Japanese agency was preparing the ground after terminating
a nine-year partnership with Publicis in February. Selling
off its shares to Publicis for €644.4 million, Dentsu
had the cash to look for purchases that would allow it to
penetrate into the UK, European and US markets.
acquisition of Aegis will make Dentsu one of the leading global
media and marketing company. In January, Aegis won the General
Motors Co. contract worth $3 billion of yearly advertising.
president and CEO Tadashi Ishii said, "I am pleased to
announce this exciting and transformational combination between
Dentsu and Aegis. Together, we will be able to deliver fully
integrated and best-in-class services to our clients through
a new global communication network born in the digital age
offering a broadened service portfolio. 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."
best part is that Dentsu has hardly any overlap with Aegis.
The combination will be complementary, bringing together a
global media platform with capabilities to provide integrated
solutions and offer enhanced quality services to clients.
geographical fit is highly complementary. Dentsu has a leading
market position in Japan's advertising and marketing sector,
an established presence across Asia, and an increasingly expanding
business in the US.
Aegis, on the other hand, enjoys a leading position showing
strong presence across Europe and increasingly in the US.
Moreover, Aegis is rapidly growing its footprint across emerging
markets, and has established robust positioning in Asia excluding
the enlarged group will be a stronger global competitor with
the scope and scale to compete for and win international mandates
across Japan, Europe, Asia Pacific and the Americas.
following the transaction, the combined group will have a
strengthened ability to offer a wider spectrum of niche services
and expertise as a full service agency.
faces strong client expectations to strengthen digital solutions.
With the rise of digital consumption and client demand for
digital services, Dentsu has successfully enhanced its digital
solutions over the years. By integrating Aegis, with Isobar
and iProspect's digital strengths in creative origination
and performance marketing, the combined business will provide
a powerful global platform for media, content and digital
technology, and will increasingly support client activities.
combination of Dentsu and Aegis, with its robust client portfolio,
will count at least 71 out of the top 100 marketers as clients
on a combined basis, and will provide global and local clients
with a new, differentiated proposition to achieve their objectives,
and also accelerate the drive to continuously create new innovations
as one unified group, Dentsu said in an official statement.
Aegis CEO Jerry Buhlmann said, "This is a compelling
combination of two great businesses that will create one of
the world's most dynamic marketing services groups - and the
first to be born in the digital age. We at Aegis are delighted
at the prospect of being able to play a full part in helping
Dentsu create a platform for global growth and continued digital
innovation. By forming the first communications group with
true global reach, the growth strategies of both businesses
will be enhanced as we provide more scale, geography, capability
and investment to support clients."