Aegis: Selling Synovate and unlocking value
According to a research report from the Bank of America, “the approach for Synovate by Ipsos has underlined the strategic attraction of Aegis’ assets and sharpened focus on its sum-of-the-parts”.
Essentially, by disposing of Synovate, Aegis Media can unlock their potential value.
Synovate is a market research firm formed from the acquisition of a number of smaller market research firms, with the brand name Synovate officially launched in January 2003.
It has a number of different divisions, such as Synovate Healthcare, Synovate Customer Experience, and Motoresearch.
Currently, Aegis is in exclusive discussions with Ipsos regarding the purchase of Synovate, with reports suggesting a price of around £520 million. Additionally, there are reports that another bidder is interested in Synovate, and is willing to pay up to £600 million. This bidder has not been named, but is represented by corporate finance advisory firm Wyvern.
The Bank of America report is ‘not convinced’ that Synovate is worth a sum of £600 million, and believes that a more realistic price is between £520 million and £550 million; closer to the price Ipsos and Aegis are allegedly discussing.
By selling Synovate, Aegis will be ‘removing a historical obstacle for the numerous potential suitors for Aegis Media’, and so the Bank of America has raised their PO to 180p.
Various reports have suggested potential buyers, with Publicis chairman Maurice Levy admitting he would be interested in parts of Aegis Media. However, he also stated that he would not be drawn into a bidding war. In 2005, Publicis approached Aegis to discuss a potential bid, but eventually withdrew.
WPP chief executive Sir Martin Sorrell also said that there were ‘some’ bits of Aegis Media that were ‘interesting’, having previously teamed up with Hellman & Friedman to bid for it in 2005.
There are also rumours of Omnicom showing interest in Aegis.
However, the likeliest candidate remains Havas, owned by Vincent Bollore, a man who is already the company’s largest shareholder (with a 29% stake in the firm).
The Bank of America report, however, also made clear that there is potential for Aegis Media to remain independent, as the current top management team is relatively new and ambitious.
Indeed, CEO Jerry Buhlmann said earlier this year, in the Wall Street Journal, “This business is not for sale… If the business performs and management performs and clients and shareholders support our strategy, we will remain independent… unless someone comes in at a very, very high price.”
In terms of what Aegis will do with the money generated from the Synovate sale, having apparently exited research, it seems that they are extending into additional media services. Today Aegis announced that they have signed an agreement to acquire Filefix, a Japanese full service digital agency.