Japanese advertising giant Dentsu today proposed to make its largest ever acquisition by agreeing to buy British marketing group Aegis Group Plc for £3.2 billion ($5 billion).
The proposed acquisition is also the largest ever in the global advertising business, after the 2000 purchase of Young & Rubicam by London-based WPP Group for $4 billion, and the 2002 acquisition of Bcom3 Inc by Publicis Groupe for $3 billion.
Minato, Tokyo-based Dentsu is paying 240 pence for each Aegis share in cash, a premium of 48 per cent to Aegis yesterday's closing price of 162.2 pence.
The high premium reveals how much Dentsu wants to buy a European rival since growth has been stagnating at its home market.
Dentsu is Japan's largest advertising agency and generated 84 per cent of its sales in the domestic market last fiscal year, but Japanese advertising industry has been contracting by nearly 6 per cent since the past decade, and revenue fell 2.3 per cent to $72 billion in 2011.
Dentsu, the world's fifth-largest advertising company, will merge with Aegis - the seventh largest - to create the largest advertising firm in Asia, and the second largest in Western Europe, and compete with rival giants like WPP, Omnicom Group Inc and Publicis.