Will Bollore tie the knot with Aegis in 2009?

Havas Chairman Vincent Bollore gestures during a press conference as he attends the Cannes Lions 2008 International Advertising Festival June 19, 2008.

PARIS/LONDON (Reuters) - The year 2009 could be the one that French financier Vincent Bollore finally consummates his "long love affair" with media buyer Aegis.

The shock exit of Aegis's Chief Executive and a depressed Aegis share price have revived speculation Bollore, the majority shareholder in Aegis and its French rival Havas, could seek to merge the two mid-sized advertising groups.

Bollore, who owns 29.9 percent of Aegis and 32.9 percent of Havas, has long said he would like the two companies to work together notably in the media buying sector.

A source familiar with Bollore's thinking told Reuters: "There will be consolidation on the way out of the crisis and acquisition opportunities including in advertising. Aegis is not a sick animal and Havas is not a big company".

An industry source said Bollore was simply waiting and watching to see if the change in Aegis management results in a change in strategy.

Analysts say merging Aegis and Havas would make sense as scale matters during an economic downturn, but they believe that Bollore is in no rush and warned that the prolonged corporate standoff could hamper any integration.

"We are not sure if the departure of the (Aegis) CEO actually makes a deal more likely: clearly the credit market remains constrained and funding for any transaction would be difficult to raise," Deutsche Bank said in a note to clients.

"What we do believe, however, is that given the current level of the Aegis share price, neither Bollore nor a third party ... is likely to ever have a better opportunity during this cycle to make an approach."

For industry observers such as Martin Sorrell, the head of WPP, the world's second-largest ad group, the question is not "if" Bollore will scoop up Aegis, the owner of Europe's largest media buyer Carat, but "when ?".

"Vincent Bollore has time and money. He could snap up Aegis today if he decided to. It's most likely just a matter of time," Sorrell told French daily Les Echos on Monday.

Bollore built his stake in Aegis three years ago when the company was being circled by Publicis, the world's fourth largest ad group, and a consortium involving Sorrell's WPP.

With a market cap of just over 700 million pounds, trailing Omnicom, Aegis has long been seen as a potential target or break-up story.

In 2005 Publicis offered 140 pence for Aegis, which currently trades at around 60 pence.

Oddo Securities analyst Bruno Hareng said that with valuations down about 55 percent on average in the past 12 months, Aegis and ad agency peers have become "value stocks".

But a savvy investor, Bollore could wait for the stock market to reach a floor, which Hareng at this stage does not see happening before April-June 2009.

The Bollore group would not comment.

VULNERABLE AEGIS ?

The November 27 announcement Robert Lerwill was stepping down as CEO sent Aegis stock surging 19 percent amid speculation such a strategic change could be on the cards.

Aegis gave no explanation but analysts said they believed Aegis wanted a "firmer direction".

Among various scenarios, investors focused on a possible split between Aegis's media buying and Synovate market research divisions and on a deal with Havas, the world's sixth largest advertising group, which is chaired by Bollore.

Citi analyst Tom Singlehurst said Lerwill had been an advocate of having the two units under one roofy this year.

Aegis Chairman John Napier, who took up the role in July this year, is to take on Lerwill's responsibilities on an interim basis. An industry source told Reuters Aegis was not immediately looking for a new CEO, a situation analysts said made it more vulnerable to a possible takeover.

Aegis has long been one of the strongest groups in the ad sector, with a good geographic spread, a strong digital strategy and organic revenue growth twice the industry average at 9.8 percent in 2007. Aegis trades at 7.7 percent estimated 2009 earnings against 7 times for Havas.

But in 2008 it lost a large account from Renault and the chief executive of Aegis Media, Mainardo de Nardis, and of Aegis Media U.S., David Verklin, have left.

During Lerwill's tenure, Bollore made five failed attempts to win two seats on the board of Aegis, a situation he has sarcastically described as a long love affair.

Aegis has refused board seats to Bollore's representatives, arguing that because he chaired rival Havas, there was a conflict of interest.

Recently, the word from the Bollore's camp has been that Bollore was taking a more relaxed stance on Aegis board representation as he was busy with his various investments, notably the launch of an electric car, and that a recovery at Havas made a deal with Aegis less crucial.

Two industry sources said that Bollore had met with Napier a

few times but it was unclear at this stage if there were any plans to call up another extraordinary general meeting.

Hareng said that if Bollore were to revive a merger with Aegis, one likely scenario would for be for Havas to launch a bid with the financial backing of Bollore.

Havas has a market capitalisation of 600 million euros (518 million pounds) and a net debt of 340 milion at end-June or a gearing of 35 percent.

CM-CIC analysts were more sceptical, saying that with a Bollore group gearing of 46 percent at end-June, an estimated 50 percent premium on Aegis would mean a cash outflow of 870 million euros, lifting gearing to 68 percent at a time when Bollore must fund other investments such as the electric car.

The source familiar with Bollore's thinking said Bollore had a some 1-2 billion euros in cash available for investments.

"If tomorrow Havas wanted to grab a big opportunity, the Bollore group would follow, in line with its share of the capital, without a problem," Bollore told Reuters in June.