Dentsu's initial public offering will generate a war chest of only
£60 million for its planned series of international
acquisitions.
This week Dentsu set a price of 420,000 yen (£2,408) for each of
its shares ahead of its IPO. The price, valuing the company at £3.35 billion, was at the top end of the range predicted. Dentsu will
make 135,000 shares available on the Tokyo stock exchange on 30
November.
Lorna Tilbian, a media analyst at Numis, said: "Dentsu is valued at 20
per cent discount to WPP and 50 per cent to Omnicom for good reason. It
has around half of the Japanese market but has very little outside Japan
and few, if any, non-Japanese clients. It's not going to go out and win
Disney because of the cultural differences. So the idea is to have paper
to buy good indigenous agencies to grow that way."
Speculation had been growing that Dentsu would pull the IPO after the
downturn in the advertising industry and the events of 11 September.
However, it wants to generate paper money to invest in acquisitions, and
because certain key shareholders, including Kyodo News and Jiji Press,
need cash.
The IPO will generate £60 million in new equity but analysts
suggest that this will not be enough to fuel extensive overseas
acquisition. The bulk of the equity will go to existing
shareholders.
Dentsu, which is headed by president Yutaka Narita, is the world's
fourth-largest network, mainly because it controls 40 per cent of the
Japanese TV ad market.
