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Dentsu Acquires Aegis Group For GBP 3.16 Billion
Dentsu Acquires Aegis Group For GBP 3.16 Billion
By: iMedia News Bureau

In a major move to consolidating its business, Japanese advertising major Dentsu has acquired London based media buying house Aegis group for a GBP 3.16 Billion in a part cash and stock deal.

This acquisition will now make Dentsu as one of the largest ad companies vying for top spot among WPP Plc and Omnicom Group.

It may be noted that Aegis is the biggest independent buyer of advertising space and this year won a contract to manage a $3 billion annual ad budget for General Motors Co. (GM). The market watchers believe that this deal may help Tokyo-based Dentsu expand in the $403 billion global industry and reduce its reliance on Japan, where the company generated 86 percent of its sales in the year ended March 31.

According to Bloomberg report, this is the fourth biggest acquisition in this space behind R.H. Donnelley Corp.’s $9.7 billion 2006 deal for Dex Media Inc., WPP’s 2000 purchase of Young & Rubicam Inc. and Infinity Broadcasting Corp.’s acquisition of U.S. outdoor advertiser Outdoor Systems Inc. in 1999.

The deal values Aegis at about 12 times the company’s earnings before interest, taxes, depreciation and amortization. Global advertising acquisitions in the past three years fetched a median multiple of 8.7 times earnings, according to data compiled by Bloomberg.

It is also reported that Dentsu will consider consolidating Aegis from next fiscal year if it closes the acquisition by the end of December, Executive Vice President Shoichi Nakamoto said at a press conference in Tokyo. Dentsu plans to keep current Aegis managers.