Dentsu to embark on acquisition drive after £3.35bn IPO in Tokyo

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.