Aegis chief’s exit leaves questions unanswered

The abrupt departure of Aegis chief executive Robert Lerwill last Thursday has left many lingering and unanswered questions hanging over the marketing services company.

Aegis has, so far, made no further statement on the timing of Lerwill’s departure or a replacement, preferring to refer questions to the carefully worded statement released on Thursday (November 27).

Aegis chairman John Napier, who has been in the role for less than six months, and Lerwill’s temporary replacement, said that Aegis Media, home of the Carat and Vizeum networks, and its global research arm Synovate are both “well managed”. He added “The ongoing priorities involve working closely with both companies to ensure that we are in the best possible shape to meet the challenging conditions ahead”.

One senior industry figure says: “It is a very odd way of dealing with an exit from a plc. It is abrupt, there is no credible replacement and nothing is clear.”

It also declines to say anything further about how this could affect the company’s ongoing battle with French corporate raider Vincent Bolloré, who holds a 29.85% stake in the company. He has tried to appoint independent directors to the Aegis board five times, each time with Lerwill managing to fight it off.

Under pressure

But the sudden nature of Lerwill’s departure has prompted suggestions that there has been a boardroom bust-up that made it impossible for him to stay on. Is it, ask industry observers, because Napier is interested in selling all or part of the company, or did Napier himself come under pressure from shareholders who were unhappy at the company’s falling share price? It rose 19% on news of Lerwill’s departure to 59p, however the price has dropped 55% over the past 12 months.

The problem could be that the share price has halved and the chairman is “getting it in the neck from the board”, says Alex DeGroot, media analyst at Panmure Gordon.

But it also comes just months after the departures of both Mainardo de Nardis, chief executive of Aegis Media, who is thought to have favoured a deal with Havas, and Aegis US chief executive David Verklin. DeGroot says: “All media companies are going through turmoil, but it makes you think that something is going on there.”

The senior industry figure adds that all European media networks will find themselves liable for money owed to media owners if advertisers collapse without paying. He points to General Motors and its open admission that it might run out of cash.”A board might go to a chief executive over that because he is not running a tight ship,” he says.

Aegis is also thought to be exposed to other European markets, especially Spain and Germany, which are feeling the economic downturn particularly hard. On the other hand, it does not have good coverage in emerging markets, where growth is still possible.

In its interim statement for the first nine months of the year, released at the end of September, Aegis reported organic revenue growth of 7.3% across the group. Although it does not break out individual countries, it noted that organic growth in Spain was “slightly negative”, reflecting the “difficult market conditions”, but that it has seen double-digit growth in several European countries, including Germany. An Aegis spokeswoman says that no single country accounts for more than 15% of revenue.

Keeping a low profile

Lerwill’s tenure at Aegis garners a mixed response. Some say he is an accountant by background and not a media man and, as such, should have gone some time ago. Others point out that the company has been well run under his stewardship. However, it is widely agreed that he had a low profile in the industry.

A senior media agency figure says that the company needs to prove to its digital division, Isobar – which Lerwill was instrumental in building up – that it is a viable business, while also looking at how to improve Synovate.

He adds: “What it needs is a five-year plan to put value back into the company, with or without Bolloré.”