Bollore deal wrong for Aegis according to Willott

by Daniel Farey-Jones, Brand Republic 14-Jun-06, 09:00

LONDON - As Aegis shareholders convene for a crucial vote today that will affect French investor Vincent Bollore's ambitions to steer it into a tie-up with his Havas group, the deal has been criticised as bad news for Aegis by leading analyst Bob Willott.

Bollore is expected to attend the Aegis AGM, which takes place at 9.30 this morning in London, and use his 29.12% shareholding to cast a sizeable vote in favour of appointing two of his associates, Philippe Germond and Roger Hatchuel, to the Aegis board.

However, the Aegis board has been campaigning hard to convince the rest of its shareholders to reject the candidates because they were nominated by a rival company's chairman and their presence on the board would lead to a "severe" conflict of interest.

Bollore has admitted his candidates are unlikely to win the vote today, but is expected to continue his campaign to steer Aegis' media buying agencies Carat and Vizeum into a partnership or merger with Havas media agency Media Planning Group.

That ambition is knocked in an analysis published today by marketing sector analyst Bob Willott in the Marketing Services Financial Intelligence newsletter, who says the plan would be a bad deal for Aegis and would not provide the springboard Havas needs to bolster its media operations.

Willott points out that Aegis' media business is three times the size of MPG and has been moving ahead thanks to its investment in the digital market and focus on clearly defined niche disciplines, while MPG has been underperforming.

A merger would still leave Bollore lagging behind the big four holding companies, according to Willott.

Willott said: "If the two businesses were to combine in any way they would still be little more than a second class multi-disciplined conglomerate that would remain much smaller than the big four. It would blur clients' perception of Aegis' market position and could eventually destroy any benefits the company has gained from focusing on clearly defined niche disciplines to date.

"As the Havas assets are mainly in decline and under-performing -- in the UK alone, Havas has seen revenue slump by 56% in the last four years -- acquiring some or all of the Aegis businesses would provide a useful prop. But a prop is not the same thing as a springboard, which is what Havas needs.

"There will be no long-term benefits unless first the root causes of Havas' decline are addressed. And that means sorting out the quality and direction of its output, rather than hoping that some sort of magical merger will do it."

Lord Sharman, Aegis chairman, will inform the AGM that the business is doing well, with first-quarter figures including revenues up 22%, organic revenue growth of 6.1%, and net new business of $665m (£356m).

In a trading update issued this morning ahead of the AGM, Aegis said that in Western Europe, it was continuing to see some signs of improvement in trading conditions in France and Germany, although the UK market has proven less robust than expected.

In the Americas and Asia-Pacific, Aegis says it is also continuing to gain market share.

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