British group Aegis, one of the last independent advertising agencies, could fall prey to a larger rival if it sells its Synovate unit, with major shareholder Vincent Bollore in the role of kingmaker.
Aegis is in exclusive talks with French peer Ipsos to sell the Synovate market research business, a unit analysts value at about £500 million (Dh3 billion), nearly a third of the group's current market valuation.
Bankers and analysts say a deal there would make the rest of Aegis, which specialises in media buying and planning for major brands, an inviting target.
A break-up of Aegis, the world's fourth-biggest ad agency by billings, would be a once-in-a-decade reshuffling of the deck in the ultra-competitive industry of creating ads for the world's biggest brands.
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French billionaire Vincent Bollore, known for daring corporate raids on Italian insurer Generali and for his big investment in electric cars, will be central to any deal since he owns 26 per cent of Aegis.
"The future of Aegis depends on Bollore's game plan; he is the kingmaker," said a banker who advises European media firms.
Bollore built his Aegis stake in 2005 by muscling aside ad industry giants Publicis and WPP, who were both circling the British agency. That same year, Bollore seized control of French agency Havas by buying a 22 per cent stake, getting four board seats and becoming chairman. Havas was in crisis at the time, and many analysts thought Bollore would merge Havas and Aegis.
The merger never happened, in large part because Aegis management opposed it, and bankers and analysts say it is even less likely now, as Bollore appears to have lost interest in it, and Havas has righted itself under new CEO David Jones.
The companies are both strongest in Europe, so a combination wouldn't expand geographic reach very much.
Bollore declined to comment, but earlier this year told reporters that the stake was no longer strategic and was more a "financial holding".
"We are betting that Bollore wants to exit," said Natixis analyst Pavel Govciyan.
In his view, Bollore bought the Aegis stake in part to stop Publicis or WPP snapping it up and crushing Havas.
"Now that Havas is doing well, Bollore has no reason to stay in Aegis," said Govciyan. "The merger won't ever happen, and Bollore is not likely to be satisfied with a minority stake and no board seat."
Aegis, which declined to comment on its future, could sell Synovate and still be strong enough to stay independent, analysts say. It earns a third of its revenues from fast-growing digital ads, and its Carat agency is a European leader.
When CEO Jerry Buhlmann took over a year ago, he set an ambitious growth strategy based largely on acquisitions. Aegis has grown faster than rivals in recent quarters and has grabbed the biggest share of new business so far this year.
Analysts put the value of the business without Synovate at between £1.5 billion and £2 billion, putting it out of reach of some buyers.
Bankers say Aegis management will demand a hefty premium before dismantling their company and Bollore could scupper any deal he didn't like.