• by September 22, 2005

AND NOW, THE WALL STREET CONNECTION -- On Thursday, Aegis' story seemed all about some intriguing French connections. Today, it looks more like a Wall Street connection. Or at the very least, a Wall Street play. Aegis shares have rallied about 40 percent since one Frenchman (Havas' Vincent Bollore) took a stake, and a second Frenchman (Publicis' Maurice Levy) sought an even bigger one in the British media services conglomerate. That has left some observers wondering whether anyone was ever earnest about actually acquiring Aegis, or whether the moves and countermoves were part of a well-orchestrated plan to goose the company's stock, and take some profits along the way. That certainly seems to be the case among some of Aegis' biggest institutional investors, who in the past several days have sold chunks of their Aegis holdings. If they thought Aegis was really going into play, why would they sell now? Why wouldn't they hold out for the real bidding war when the stock could surge even higher?

Maybe it's because there won't be a bidding war, and just maybe, the rally has been enough of a market correction to keep Aegis' valuation at equilibrium, making it costly enough to keep hostile suitors at bay. At least long enough until Aegis shareholders can realize the kind of return they're really looking for.

Not that anyone's complaining about the recent run. Certainly not the institutional investors who took some profits and continue holding smaller, but more valuable positions in Aegis stock. Certainly not the Aegis board whose options suddenly look like they may actually be worth something. And certainly not Havas' Bollore, who may or may not have actually wanted to acquire Aegis, but accomplished two things along the way: 1) He turned public perceptions of Havas from a wounded holding company on the run to an aggressive acquirer on the prowl; 2) He netted a tidy profit of some $600 million in Aegis stock run-ups since he took his 6 percent stake.

Of course, Havas is still a wounded beast, and desperately needs a big strategic play like the acquisition of Aegis to get it back on track.

As for Publicis' Maurice Levy, well, he's the wild card. Aegis Thursday finally confirmed what the French and U.S. financial press had been speculating on for days: That Publicis has held some preliminary talks with the Aegis board. In fact, Aegis called them "very preliminary." We didn't know talks could a little preliminary or very preliminary, but at least these ones weren't extremely preliminary. In any case, Aegis characterized them as being "extremely premature." So premature, in fact, that it advised shareholders not to "conclude that these conversations will lead to an offer for Aegis."

That description made us wonder what the actual substance of the conversations were like. According to insiders, they went something like this:

Aegis CEO Robert Lerwill: "Bon Jour Monsieur Levy."
Publicis CEO Maurice Levy: "Good Day Sir Lerwill."
Lerwill: "Sir?"
Levy: "But I was told..."
Lerwill: "Ah, you must be thinking of Sir Martin - er Sorrell. Well, I've been meaning to talk to the queen about that one."
Levy: "A queen? Well, Sir - I mean monsieur - I mean mister Lerwill, ah, may I call you Bob?"
Lerwill: "Er, it's actually Robert, Maury."
Levy: "It's Maurice, Bob. Anyway, enough of this nonsense about queens, we are here to liberate you. Are we not free men, after all?"
Lerwill: "Funny, that's exactly what Vincent told us. Now exactly how liberating were you thinking?"
Levy: "Well this is all very preliminary and extremely premature, of course, but we were thinking 2.8 billion."
Lerwill: "Was that Pounds Sterling, or Euros?"
Levy: "Francs."
Lerwill: "Right, well, good-day, mate."

Okay, so it didn't go exactly that way, but we wouldn't be surprised if there wasn't some tea, and those fancy little sandwiches, or at least some crackers - or is it biscuits, we can never get that one straight - involved. And whatever they were noshing on, we imagine something got lost in translation, because we'd find it hard to believe that Publicis would be serious about acquiring Aegis. The main reason: They've got everything they already need in that respect. Publicis' media networks are every bit as good as Aegis'. In fact, we'd have to say the two are on par in terms of strategy and orientation. They also both have Procter & Gamble as a common media account, which is the main reason the deal doesn't make any sense. Unless, of course, they already cleared their "very preliminary" conversation with the packaged goods giant and got some kind of assurance that this would not be a problem - at least not preliminarily. In the long run, however, we'd be surprised to see P&G allow its communications planning account to become consolidated within one company resulting from the merger of its two suppliers.

Instead, we think Publicis' play was more of a spoiler move - a well-timed gesture of interest that drove Aegis' shares up just enough to spoil a hostile takeover from Havas, and just maybe enough to keep bigger fish like Omnicom out of the European waters. Only time will tell, of course.