Aegis shares soar on talks over £500m Synovate sale
Tuesday 07 June 2011
Shares in Aegis Group hit a four-year high yesterday after the company confirmed it was in talks to sell its market research business to Ipsos. The London-based marketing group confirmed that Ipsos, the French company that owns pollsters Ipsos Mori, had made an approach to buy its Synovate business. The deal could be worth £500m, according to analysts. The shares closed up 7 per cent at 151p on the news.
Alex DeGroote of Panmure Gordon said there was "very solid industry logic" to the takeover, because the combination "would form a much bigger pure-play market company".
He continued: "There are other players that might be interested. In this case there could be upside pressure to the £500m estimate."
GFK is believed to be considering a bid, and experts said yesterday's announcement could force the German group to show its hand.
Mr DeGroote speculated that advertising giant WPP could also be interested in a takeover approach, while Neilsen and Publicis have also been linked with a move.
Aegis added yesterday that there could be "no certainty that any agreement will be reached" with Ipsos.
Analysts at Altium Securities said the sale would be a "radical move" for Aegis given that Synovate generated a little over a third of the total group revenues.
However, the analysts added that there were several reasons why asale would make sense. There was "little or no" synergy between the two businesses, which are run separately, they said. It generated a lower margin than the rest of the group and was also "the less well understood part of the group, a factor which we believe may have exerted a drag on its overall valuation".
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