Aegis no shield from Greeks bearing gifts

Think, for a minute, of Aegis as an ancient walled city under siege. Outside lies an interesting wooden horse, left by its late assailant as a mysterious peace offering. Should the defenders open their gates and bring it within?

The offering, in its contemporary form, is principal shareholder Vincent Bolloré’s silken suggestion that only two of his nominees – not directly connected to his business interests, by the way – need be elected to an Aegis board which includes 11 other independent non-executive directors. As the price of continuing collaboration, what could be more reasonable than that, given the proposer now controls nearly a third of the company’s voting shares?

But Aegis chairman Lord Sharman is no Priam. He’s seen this sort of thing before, at Havas. The kind offer will be rejected and the would-be boarder seen off – for now. But what then?

Rejection itself carries considerable risks, as Bolloré himself made clear in an open letter last week: “To have a board in open conflict with its principal shareholder will unsettle both employees and clients. That would not be good for Aegis and could be exploited by its competitors⦠You (Sharman) have consigned Aegis to a troubled phase in its history which could destroy value.” No ambiguity there, then. Bolloré may not be able to order the board about, but he does control the eventual fate of the company. He can see off any competitor, or any white knight; and he can wear the board down by questioning its every action, effectively paralysing corporate activity. Except, of course, he will be careful about destroying value when so much of it is his own.

Since, on previous form, Bolloré is unlikely to sell up and go away, the Aegis board must be hoping that he will now be forced into a formal takeover bid. This would give the existing management an honorable get-out in the form of a so-called bid premium (“maximising shareholder value”, as they say). Yet it is precisely this, or at least the colossal presumption about the value of such a premium, that has proved the sticking point with previous suitors, such as Omnicom, Publicis and WPP. It also explains Bolloré’s stealthy tactics: circumventing the board to get the company on the cheap.

Frankly, a summer of attrition is much more likely than a takeover bid, as Bolloré allows present market turbulence to take its toll on the Aegis share price. Aegis’ management might, however, find useful ammunition in an analysis published this week in Marketing Services Financial Intelligence. It takes a look at the strategic fit between Aegis and Havas (where Bolloré is chairman and also principal shareholder) and finds it sadly wanting. The gist is that Havas is dated and holed as a business, whereas Aegis has been usefully investing in growth areas like research (Synovate) and digital services (Isobar). Though an alliance would prop up Bolloré’s interests, it is hard to see how it would benefit Aegis’. Even a full-blown merger would lack critical mass, leaving the combined businesses a sickly global fifth behind Publicis Groupe.

Even so, such strategic insight has a wistful feel about it. The days of Aegis’ independence look numbered. Bolloré will get his way eventually, even if he has to call in WPP to help him.

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