Aegis Group stays silent on talk of strategic review

UK-- Media group Aegis was staying tight-lipped today following a report over the weekend that it was to embark on a strategic review that would look at the possible sell-off of its Synovate market research business.

The company refused to comment on The Sunday Times report which said Aegis chairman John Napier had asked investment bankers Merrill Lynch to carry out a review of the group's operations, following the sudden departure of CEO Robert Lerwill at the end of November.

According to the newspaper, Napier wants to find the best operating structure for Aegis and one possible outcome of the review could be a recommendation that Synovate is sold. However the review could also push for Aegis to forge closer ties with its single largest shareholder, Vincent Bolloré – the French billionaire and chairman of ad group Havas.

Lerwill's departure had already triggered speculation that a merger between Aegis and Havas was in the offing, however comments from financial analysts today seemed to favour a break-up scenario.

In an investment note, Citigroup said: “With a c. 30% shareholder in the form of

Bolloré, it seems unlikely that the group can put the whole group ‘up for sale' – by definition this would end up being a process management wouldn't necessarily be able to control.

“A break-up of the company, in particular a sale of Synovate, the group's market research division, would be more do-able, in our view. Synovate is a discrete asset and it would not require shareholder approval to mandate a sale.”

Meanwhile, Panmure Gordon analyst Alex de Groot noted (via The Guardian) that there are no obvious synergies between Aegis's market research business and the rest of the group's media planning and buying activities. “This is at the heart of questions over Aegis's corporate strategy,” he said.

Were Aegis to put Synovate up for sale, it may find a number of potential trade buyers waiting in the wings. WPP boss Martin Sorrell has previously expressed an interest in the agency, however an acquisition may be out of the question now following the completion of WPP's £1bn takeover of TNS.

Ipsos co-president Didier Truchot is also a past admirer of Synovate, having described it once as a “very nice and dynamic organization”. GfK could also be one to watch, the German agency having lost out to WPP in the battle for TNS last year.

Author: James Verrinder & Brian Tarran