Havas is to spend €253m ($336m) buying back 12 per cent of its shares, a move that will boost majority owner Vincent Bollore’s shareholding from 32.84 per cent to 37.32 per cent. The buy-back is at €4.90 share, a healthy 21 per cent premium to the current price and values Havas at around €2bn.
Havas chairman Bollore will not participate in the buy-back but the value of his increased holding will rise substantially as the agency group’s earnings per share (there will no be fewer shares in existence) will rise by about 11 per cent.
All very nice for Bollore (pictured) but not necessarily for CEO David Jones (although his own shares and options will rise too). Jones, though, will see what could have been a sizeable war chest greatly diminished. Last year he said he had about $750m for acquisitions. A share buy-back and money to spend aren’t necessarily at odds, a higher valuation may make borrowing money cheaper. But Jones’s corporate wallet isn’t as full as it was.
Havas is a rather odd company as it’s unusual in the marcoms sector for a company of its size to be so closely controlled by one man, in this case Bollore through his family holding company. Bollore also owns nearly 29 per cent of Aegis, owner of the Carat and Vizeum media buying networks. Aegis is currently valued at €2.8bn (£2.3bn), which means that the long-awaited Bollore-engineered merger of the two is probably out of his reach. Bollore has no management position at Aegis.
So does this mean that deals are off the menu for Bollore, Jones and Havas?
On the face of things it rather looks like it. One problem is that, as the marcoms world of holding companies has contracted to just WPP, Omnicom, Publicis Groupe, Interpublic, Dentsu and the rather smaller Aegis and Havas, there isn’t that much left to buy that would make a big difference to such big companies.
WPP has snapped up a gaggle of media agencies, now under the GroupM banner, and also expanded in research with the £1.1bn buy of TNS Sofres in 2008. It also owns JWT, Ogilvy & Mather, Grey and Y&R. Publicis Groupe has spent heavily on digital media: Digitas, Razorfish and Rosetta Marketing Group. Omncom and Interpublic have been less aggressive.
So far evading their clutches in the US are Horizon Media, Wieden+Kennedy and AKQA, the latter being the most likely plum to fall as it’s private equity-owned. There’s also the Edelman PR group although that, like the others in this list, is doing very nicely on its own. In the UK there’s Mother, which would fit very nicely into Havas, which has recently re-branded its biggest agency Euro RSCG as Havas Advertising. Not much really, and all of these would the subject of a fiercely expensive auction if they were to come up for sale.
So, aside from the obvious benefits, Vincent is probably wise just to become even richer.