• by Joe Mandese , August 5, 2005

Vincent Bolloré, the French corporate raider who has become the controlling shareholder in Paris-based agency holding company Havas, has made another strategic investment making him the No. 3 shareholder in U.K.-based Aegis Group, the parent of media buying firm Carat and several other burgeoning media networks. The stake, which was disclosed Thursday, amounts to 6.03 percent of Aegis, placing Bolloré just behind big institutional investment groups Harris Associates (10.12 percent) and Fidelity (0.12 percent) and just ahead of Goldman Sachs (5.97 percent), as an Aegis shareholder. Those institutional investors, in fact, have been boosting their stakes in Aegis in recent months, fueling speculation that shares of Aegis, the purest media play of any agency holding company, were undervalued and that the company was ripe for a takeover (MDN July 13).

Bolloré's stake, in fact, appears to be having just such an effect on the minds of investors, driving Aegis' share price to a three-year high. Aegis shares were trading at about $2.25 Friday morning, about 25 percent to 30 percent higher than their price in recent months. The activity no doubt was sparked from expectations that Bolloré's stake is the first step in an investment strategy to gain control of Aegis, and that it might spark a bidding war among other strategic investors, most likely WPP Group, which would seem a likely suitor. Nabbing Aegis would fulfill WPP chief Sir Martin Sorrell's goal of surpassing Omnicom as the world's largest advertising company. WPP and Aegis would also have terrific synergies, especially their research divisions.

Aegis is known for media buying networks like Carat, Vizeum, Isobar, and Posterscope, but it's Synovate research division is highly regarded among blue chip marketers, especially its MMA marketing mix modeling unit. WPP also presumably would like to establish a bigger relationship with a major Aegis media client, Procter & Gamble, which ironically had been an account of MediaCom's before WPP acquired that unit as part of its takeover of Grey Worldwide last year.

Havas was a failed suitor in the bid to acquire Grey, a setback that ironically helped pave the way for Bolloré to curry favor with the Havas board and begin his takeover play. "This is exactly what he did last year," recalls one Havas insider, referring to Bolloré's initial disclosure of a 6 percent stake in Havas, a level of investment international law requires investors to disclose. In fact, Bolloré wasted little time accumulating his stake, doubling an initial investment on Aug. 2 of 3 percent of Aegis shares.

While Bolloré's ultimate designs on Aegis are not yet clear, some observers believe the move may not simply be a financial play, and that it might be part of a bigger push to make an impact and leave a legacy on the advertising business, especially in his homeland of France. The French take a great deal of pride in their corporate structures and are very protective of their enterprises. And Carat, the core unit that formed the basis of Aegis Group, ironically began as a French company. In fact, it was one of the largest independent media buying companies in the world, before it ran afoul of French laws by conducting questionable media buying practices that effectively made it a broker of media time and space without disclosing the prices it paid to clients.

After relocating to the U.K. as part of Aegis, Carat's new management did a masterful job of rehabilitating its image as a media services company, transforming it from one of the most sullied reputations in the marketplace to one of the preeminent. The transformation began largely through strategic research investments, the creation of proprietary tools, and tactical acquisitions that ultimately gave it a foothold in the world's largest advertising marketplace: the United States. When Carat won Procter & Gamble's plumb communications planning account last year, it seemed to cap off the transformation, making Carat, and the Aegis Group, the media services organizations to contend with.

While it is known mainly for media planning and buying, as well as for research, Aegis has also cobbled together one of the most impressive interactive advertising networks in the world in Isobar, and has created the world's largest outdoor media buying organization in Posterscope. Last year, Carat CEO David Verklin proclaimed that outdoor would actually become the first "globally" bought medium, and just recently WPP Group restructured its outdoor media units into a consolidated entity known as Kinetic.

Aegis, meanwhile, is more deeply vested in digital media than any of the other broad-based agency holding companies, with the exception of pure plays like Aquantive and Digitas. In fact, the company has been betting that media will become the center of marketing services, and that digital media - especially search - will become the center of that.

So the notion that a French corporate raider, known mainly for acquiring and selling off undervalued assets for profit, would become a French corporate savior, not simply resuscitating an ailing Havas, but bringing Carat/Aegis back to French soil, seems too irresistible for some to ignore.

"When he started this, nobody ever thought what he was saying would be true - that he would actually build it up," says a Havas insider. "But he's almost 60 and maybe he wants to leave a legacy. You've got to remember this Havas thing runs much deeper in the French soul. And if he were to bring Carat back into the French fold, well he'd be a real hero."