Aegis set for pounds 70m US buying spree
Tuesday 02 March 1999
Crispin Davis, Aegis chief executive, said the company was looking for bolt-on acquisitions in the US, which would help it achieve its target of becoming the market leader over the next five years. "The US is 40 per cent of the world advertising market," he said. "We've made a very encouraging start, but the upside is enormous."
In January, Aegis established itself as a major player in the US by winning an account with Pfizer, the pharmaceuticals giant, worth $280m (pounds 173m) in annual billings. However, Mr Davis said the group was still too small to pitch for the largest accounts awarded by the likes of Coca-Cola, Disney and General Motors.
Aegis has accumulated a cash pile worth pounds 36.9m, helped by its strong cash flow, but the company believes it could comfortably cope with pounds 50m of debt.
Mr Davis said Aegis was preparing to invest in a series of joint ventures in Japan, China and Taiwan, at a cost of about pounds 10m. But he added that the company would hand back the money to its shareholders if it could not find suitable targets.
He was speaking as Aegis reported an 11 per cent increase in pre-tax profits to pounds 50.6m for the year to December, on turnover up by 13 per cent to pounds 4.13bn.
The figures, which lifted Aegis shares 2.5p to 123p, prompted analysts to edge up their profit forecasts to pounds 59.5m.
Mr Davis said he expected the global advertising market to grow by 4.5 per cent this year. Meanwhile, the explosion of digital television and the Internet would continue to drive up demand for Aegis's value-added research services, helping the company to lift its gross margins.
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