Aegis' New French Connection, Publicis Signals Renewed Interest

Aegis Group, the London-based parent of Carat, Isobar and other media networks, has spent much of the past year fending off the overtures of an ardent French suitor. Now it may have another. In an interview published in today's Wall Street Journal, Maurice Levy, CEO of Paris-based Publicis Groupe, said the agency holding company is weighing a major acquisition, and speculation is that it could be Aegis Group.

Last year, Publicis made a tepid bid to acquire Aegis, which was rejected by the board.

One potential hurdle to a new Publicis bid, Levy recently told the French news media, is that Vincent Bollore, chairman of Paris-based rival Havas, already controls nearly 30% of Aegis and has the power to block another suitor. Bollore, of course, has spent much of the last year amassing that stake in Aegis, but has failed in his attempts to gain any seats on the Aegis board.

Bollore recently indicated plans to make another run at gaining board representation, which some observers see as a prelude to a takeover of Aegis, but Aegis' management team has so far successfully blocked him, and reportedly has a strong ally in Fidelity Investments, an institutional investor that is Aegis' second largest shareholder.



That's a lot of interest circling around Aegis, which may have other suitors waiting in the wings, including Martin Sorrell, the CEO of WPP Group, who previously made an unsuccessful run at Aegis, and is free to do so again. All of the suitors are keen on Aegis' media services agencies, which include Carat, Vizeum and digital media network Isobar. WPP's Sorrell also is desirous of Aegis' Synovate research operations, which would complement WPP's burgeoning marketing and media research division.

Meanwhile, Levy's comments in the Journal should stir up another round of interest for Aegis, noting that Publicis would decide in the next several months whether to use its cash reserves to make a sizeable acquisition or to pay a cash dividend to its shareholders. Aegis makes sense for a number of reasons. For one thing, the fusion of its media services operations would help catapult Publicis into a dominant position in the global media buying and planning marketplace. Publicis currently owns Starcom MediaVest Group, ZenithOptimedia Group, and Denuo.

Aegis also has cultural ties for both French agency holding companies. Aegis was created from the roots of Carat Espace, once a powerful French media buying agency that ran afoul of French laws because of its unsavory media buying practices.

Wall Street analysts believe Publicis could muster $1.3 billion for an acquisition, possibly more for the right asset. Aegis group is expected to fetch about $2.8 billion.

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