£3.2bn Japanese takeover of Aegis ‘will create a challenger to WPP’

A MEDIA planning firm that works for clients including Adidas, Coca-Cola and Disney is to be taken over by a Japanese company in a £3.2 billion deal.

London-based Aegis, which was set up in 1968 and owns the Carat agency, will become part of the biggest media and digital communications group in Asia and the second-largest in Europe following the tie-up with Tokyo-based advertising giant Dentsu.

The deal’s backers hope the combination of Aegis’s expertise in media planning and buying and Dentsu’s advertising might will challenge the likes of Sir Martin Sorrell’s global WPP empire and US group Omnicom.

The takeover news surprised the City and led to a 45 jump in shares of FTSE 250 Index-listed Aegis to 235.3p. Dentsu is offering 240p a share, which is a 48 per cent premium on Wednesday night’s share price.

Aegis employs some 12,000 people and generated revenues of more than £1bn in its last financial year, while Dentsu has nearly 22,000 staff and a presence in 29 countries. Its revenues were about £2.5bn last year.

Jerry Buhlmann, chief executive of Aegis, 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.”

He added: “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.”

Buhlmann has agreed to remain with the group until at least 2013 following the takeover and Dentsu said it had no plans to change Aegis’ workforce or move its London operation.

Aegis’ biggest shareholder, French billionaire Vincent Bollore, has sold a 15 per cent stake in the business to Dentsu and will sell the company a further 5 per cent as part of the takeover.

The deal follows a number of recent acquisitions in the communications sector, after French group Publicis agreed to buy UK advertising agency Bartle Bogle Hegarty earlier this month and WPP bought a majority stake in London digital agency AKQA in June.

Alex DeGroote, analyst at Panmure Gordon, said there was a “sound strategic logic” to a deal between Dentsu and Aegis.

Investec expert Steve Liechti added that Dentsu had made a “knockout” offer, which made it unlikely any rivals would try and muscle in on the deal.

Founded in 1901, Dentsu is a “full-service” advertising agency in Japan, providing services including media buying and planning across traditional, digital and interactive media, creative production and sales and marketing services.

Aegis made underlying earnings of £197.4 million in 2011.

The deal will now be put to Aegis shareholders and Dentsu hopes to complete the acquisition by the end of December.

It also means that Japan is the second most active overseas acquirer this year with more than $20bn (£13bn) worth of deals, behind the United States but surpassing all major European nations and China in outbound M&A.