Dentsu has been telling us for months that it’s only a matter of time – time needed to win regulatory approval in China, where Dentsu is desperate to expand and sees Aegis as a way of doing so.
Now the Chinese seem to have thrown another spanner in the works (or maybe the same one) if Dentsu’s latest statement is anything to go by.
Dentsu announced today that completion of the deal has been postponed for yet another month – to March 28. Bizarrely it claims that approval from the China regulators has been delayed because of the Lunar New Year holiday, although most business activities in China, the world’s second or third biggest economy (depending on what figures you look at) seem to survive the festivities.
Relations between China and Japan have always been a touch tense of course and have become infinitely more so because of the ongoing dispute between the two countries over ownership of the Senkaku Islands.
And it’s increasingly clear that the Chines regulators, which ultimately means the Chinese government, doesn’t like the look of Aegis/Dentsu at all.
That’s not the only problem on Dentsu’s plate. The Japanese yen has fallen dramatically in value as the Japanese government tries to help its exporters to foreign markets, meaning that the already toppy £3.2bn price tag for Aegis becomes even more expensive. Dentsu claims it hedged such a risk by buying foreign currency in advance but this is unlikely to amount to the whole vast sum.
Also one of Aegis’s most profitable businesses, out of home media planning and buying through its Posterscope subsidiary, has recently come under heavy pressure in the UK from Omnicom-backed new out of home contender Talon.
The odds are still, probably, on the deal going through – eventually. But it may be at a revised price.