£500m Ipsos bid for research firm Synovate puts £2bn Aegis into play

French research giant Ipsos has bid £500m for Synovate, the global research firm owned by media buying group Aegis.

Synovate has lagged its bigger sibling’s performance over the past decade so a bid should be welcome, allowing Aegis to cuts its debt and concentrate on what it clearly does best.

But why is this a headache for Aegis CEO Jerry Buhlmann (although not for his shareholders)?

Because a bid for Synovate, if successful, clearly puts Aegis as a whole into play as bigger marcoms rivals WPP, Omnicom and Publicis Groupe would find bidding for Aegis-without-Synovate irresistible.

Aegis is currently valued at £1.82bn and its shares rose nearly seven per cent on the London Stock Exchange to reach 150p this morning.

So the boys in dark glasses are betting that a full bid for Aegis is on the way.

But who could afford a likely price of well north of £2bn?

First, though, there’s Synovate to consider. If Aegis agrees to sell there will be an auction, almost certainly involving world research leader Nielsen and German contender GfK. Gfk tried to merge with the UK’s TNS in 2008 only to be gazumped by a £1.1bn bid from Sir Martin Sorrell’s WPP.

In the normal course of events WPP (which is the second-biggest research outfit in the world after Nielsen through its Kantar grouping) would be interested in Synovate.

But Sorrell is likely to keep his powder dry to aim for the bigger prize of Aegis.

But WPP (although it might be able to find £500m or so for Synovate) would struggle to find the funds for Aegis as the company is still paying down debt that hit £3bn after the TNS acquisition.

CEO Sir Martin Sorrell said at the start of the year that he was only going to spend around £100m on acquisitions this year although he’s since revised that, having spent rather more acquiring German ad group Commarco and two digital agencies in Brazil.

Omnicom and Publicis Groupe could certainly raise the funds, fourth-placed marcoms company Interpublic would struggle as it is only just moving back into profit after a lean few years. Vincent Bollore’s Havas would have to merge with Aegis to pull off a deal.

A dark horse might be Japan’s Dentsu, currently riding high in the US on the back of a stream of big wins by its agency Mcgarrybowen.

Sorrell, though, would surely be unable to resist this particular fight even if he had to sell one or more of his advertising or media agency networks to enter the fray.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.