Further Consolidation A 'Near Certainty,' Wall Street's Wieser Suggests Dentsu May Be Next

Wall Street analyst and former Madison Avenue forecaster Brian Wieser issued a report this morning describing further agency holding company consolidation as a “near certainty,” speculating that Japan's Dentsu could be the next big mover following Publicis and Omnicom’s merger.

“Consolidation is the most important theme impacting the global agency industry presently,” Wieser wrote, citing recent comments by Dentsu North American chief Tim Andree that the Tokyo-based holding company is “open to any discussions,” but implying it would be as a suitor. Specifically, Andree told the Financial Times that Dentsu is now the “acquirer of choice” in the advertising world.

Wieser described Andree’s signal as “undeniably obvious to us given the company's needs for growth outside of Japan and the diminished scale they find themselves with following the Publicis-Omnicom merger agreement.”

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Wieser noted that a Dentsu/Havas combination could be problematic, given French antitrust concerns, and speculated that Andree’s comments may have been made to “provoke” Havas or even WPP to make a move on Interpublic.

“Such provocations would probably help Dentsu’s board in Japan appropriately prepare to make one themselves,” Wieser speculated.

With Madison Avenue’s M&A action heating up -- one way or another -- Wieser said the most logical beneficiaries are Interpublic shareholders, as it is seen as the most likely target to be acquired.

“We are doubtful the company will continue as an independent entity,” Wieser, a former Interpublic executive, wrote -- concluding that Dentsu will be its most likely acquirer, although he offered Interpublic acquisition scenarios by WPP and even Havas.

“Whomever does not buy Interpublic will probably struggle if they are neither massive nor filling a niche in the industry,” Wieser concluded, adding that while continuing “independence is possible” for Havas, Dentsu or even Interpublic, “industrial logic -- and the enhanced value that each can realize as part of a larger entity -- should drive consolidation.”

1 comment about "Further Consolidation A 'Near Certainty,' Wall Street's Wieser Suggests Dentsu May Be Next".
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  1. Adonis Hoffman, Esq. from Leadership Counsel LLC, September 6, 2013 at 3:07 p.m.

    Not only is further consolidation certain, but it is also necessary if holding companies are to survive Google's strategy to disintermediate the agency role and render it technologically irrelevant. In this environment, the only hedge against such a fate is scale.

    If consolidation results ultimately in three dominant global players, competition, as we now know it, has a chance of survival. Otherwise there will be the "bigs" and the rest.

    From a policy perspective, the acquisition of a major U.S. holding company should easily pass regulatory scrutiny, if for no other reason than to compete with Google, which has moved four-square into the advertising market and, unless abated, will come to dominate both the sell-side and the buy-side online.

    Adonis Hoffman, Adjunct Professor,
    Marketing, Advertising & Public Policy
    Georgetown University

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