Aegis turning Japanese as Dentsu pounces

The relatively brief stock market history of Aegis is set to come to an end with the the media and digital communications group agreeing to a takeover by Japanese advertising agency Dentsu.

Dentsu is offering 240p in cash for each Aegis share, almost half as much again as the shares were trading at in London on the day before the agreed bid announced. The offer terms value the whole of Aegis at around £3.16bn.

In a dawn raid not seen so often in the City these days, Dentsu snapped up a 15% stake in Aegis and entered into a conditional agreement to purchase a further 5% of Aegis. In aggregate, Dentsu has acquired Aegis shares, interests in Aegis shares and received irrevocable undertakings in relation to a total of 30.5% of Aegis's ordinary share capital so, barring a rival bid, this takeover already looks done and dusted, although, as the takeover is being effected by a scheme of arrangement, it will need the approval of at least three-quarters of Aegis's shareholders.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Many observers in the City had identified Aegis as a likely takeover candidate after it offloaded its market research business, Synovate, in October 2011.

While Aegis is a 21st century creation - at least in terms of its stock market listing - Dentsu's history goes back all the way to 1901. It has grown to become the market-leading 'full-service' agency in Japan, and claims to have a 24.2% market share in his home land, the second largest advertising market in the world.

Advertising is, as the old clich has it, a 'people business', and Dentsu said it intends to keep Aegis's executive management team intact, to lead the business "alongside Dentsu". Jerry Buhlmann, Aegis's Chief Executive Officer, has stated his intention to stay in a leadership role until at least the end of 2013 and become a member of the Dentsu Network executive management team. Discussions between Dentsu and Aegis's executive management in relation to specific roles in the enlarged group and terms of employment will take place upon the takeover arrangements being completed.

Shares in Aegis shot up 73.8p to 236p in the first hour of trading, still a few pence shy of Dentsu's cash offer.

JH