What goes around comes around. Aegis began as a London-based holding company to house Carat, which was, once upon a time, a very French media-buying brand. So it is perhaps appropriate that the takeover speculation surrounding Aegis - the only big marketing services group that has yet to be swallowed by a major holding company - centres on agencies based in Paris. There would be a certain sense of closure if the front runner, Publicis Groupe, headed by the veteran French adman Maurice Levy, were to prevail.
Last week, Publicis made a bid for Aegis that valued the company at £1.57 billion. But this bid was, in effect, "flushed out" by the fact that another French investor, Vincent Bollore, the chairman of Havas, had built up a 6 per cent stake in Aegis. And it is no secret that Havas needs to find ways to bolster its own rather weak media offering, Media Planning Group.
The Publicis bid stimulated no small degree of soul-searching at two other holding companies, Omnicom and WPP. The latter would find it more difficult to swallow Aegis, given that it is in the process of digesting Grey Group.
But Omnicom also faces credibility issues - after all, it took a 13 per cent stake in Aegis back in 1993 and seemed on the verge of making a full bid. But the group's ardour (such as it was) completely fizzled out and it sold up again in 1996.
Over the years, Aegis has made more or less convincing noises about its desire and ability to forge a long-term future as an independent entity.
But in the latter stages of Doug Flynn's tenure as chief executive, internal strains began to show and there were damaging squabbles among his lieutenants as to future direction. In particular, factions within Carat began to resent the amount of resources being committed to what had been a non-core activity - the company's research division.
And when Flynn was succeeded in February by Robert Lerwill, a former finance director at WPP, there was speculation that his primary role was to tidy up the books in readiness for a sale.
1. Aegis operates in two main sectors. In media planning and buying it has four main network brands: the flagship Carat; a second-string, media planning and buying brand, Vizeum; the outdoor media specialist, Posterscope; and Isobar, an umbrella for the group's digital advertising properties (including, interestingly, some creative companies).
2. Aegis has 17 market research companies (including Market Facts in the US and Canada; Asia Market Intelligence; Research Fact in Japan; and Pegram Walters in the UK), which are grouped together under the Synovate banner.
3. Revenues from media communications totalled £474.6 million in the year to 31 December 2004. Aegis made £272.4 million from market research.
4. Carat came fourth in the 2004 worldwide rankings for media agency networks with estimated billings of $18.6 billion, according to Recma. WPP's MindShare was third with $18.7 billion, Omnicom's OMD came second with $20 billion, while the Publicis-owned Starcom MediaVest Group was top with $20.4 billion. Vizeum came 12th with $1.7 billion.
5. Carat is the most Euro-centric media network. It is the number one media network in Europe with billings of $11.2 billion, fourth in Asia-Pacific but only ninth in the US, with billings of $4.7 billion. It is weak in Latin America.
6. France is Carat's strongest European market. It is top of the table with billings of $3.3 billion, ahead of MPG on $2.9 billion. It is second in Germany (on billings of $2.8 billion) and in the UK it is fourth, with billings equivalent to $1.4 billion. But there has been management upheaval in France - Philippe Bourguignon resigned as president of Aegis Media France a couple of weeks ago - and rivals say it is looking more vulnerable there than ever before.
7. Of all the potential suitors, Publicis' global network best complements that of Carat. Although Starcom MediaVest Group is the biggest media agency on a worldwide billings basis and it is the largest buyer in the US, its billings in Europe are around $4.6 billion - in other words, around one-third of Carat's. Starcom is ranked ninth on the EMEA league table, below MPG, which comes in seventh place.
WHAT IT MEANS FOR ...
- The odds are that Aegis will be snapped up and, at this stage, prolonged uncertainty about its future could become damaging.
- Some argue that Publicis is an unlikely suitor, principally because it is seeking a secondary listing on the New York Stock Exchange. For it to achieve that ambition, all of its agency-advertiser contracts must be Sarbanes-Oxley compliant.
- Renegotiating all of the group's contracts, especially those of long-standing Carat clients, could open a very ugly can of worms.
- Sources in Paris go so far as to suggest that Publicis' interest in Aegis may be mischievous and is merely part of ongoing rivalry between Vincent Bollore and Maurice Levy.
- Bollore and Havas may well launch a counter bid in an effort to prop up the Media Planning Group network.
- Unfortunately, a successful Havas bid would probably trigger a monopolies investigation in France, where Aegis and MPG stand at numbers one and two in the market.
- Aegis sources say Omnicom tabled a bid at 140p a share for Aegis last year but it was turned down.
- Omnicom has opted to roll out its PHD network globally by opening offices in new markets. However, a renewed attempt to buy Aegis cannot be ruled out.
- The Aegis Synovate research division could be a stumbling block because Omnicom is already strong in this area.