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UPDATE 3-Aegis to defend market share; no Havas merger talks
March 19, 2009 / 7:42 AM / 9 years ago

UPDATE 3-Aegis to defend market share; no Havas merger talks

* Should at least maintain market share in difficult 2009

* Has not discussed Havas merger with shareholder Bollore

* To cut 5 percent of workforce

(Adds details, analyst comment, updates shares)

By Georgina Prodhan

LONDON, March 19 (Reuters) - Aegis AEGS.L expects to defend its share of a more difficult market in 2009 and has not held talks on a possible merger with France’s Havas EURC.PA, the British marketing group’s interim chief executive said.

John Napier said he had positioned the company for a tough environment with a cost-savings programme that includes cutting 5 percent of the workforce, and was pleased with a first quarter in which Aegis will have won over $1 billion of new media business.

In 2008, organic sales grew 4.6 percent to 1.34 billion pounds ($1.91 billion), above the 1.29 billion pound average forecast of 17 analysts polled by Reuters Estimates.

The reported figures were helped by a weak British pound, strong growth in digital offerings, and emerging markets.

Operating profit rose 10.7 percent on a constant currency basis to 185 million pounds and the company said on Thursday it would raise its full-year dividend 8.7 percent to 2.5 pence.

“In these environments, you have to make sure that you’re prepared and fleet of foot,” Napier told reporters.

“I believe we have all the levers necessary to respond well to difficult market circumstances. Where the market goes, you tell me. We always expect to at least maintain our market share.”

Larger British agency WPP (WPP.L), the world’s second-largest advertising group, reported 2008 like-for-like revenue growth of 2.7 percent earlier this month and forecast 2009 sales would fall 2 percent.


Aegis shares rose 1.6 percent to 76.5 pence by 0952 GMT, outperforming a European media index .SXMP that fell 0.3 percent.

“Stock trading on 9.3 times price/earnings fundamentally looks attractive, but on a 15-20 percent premium to WPP, we believe at least some hopes of corporate (M&A) activity are already factored in,” UBS analyst Alastair Reid wrote in a note.

Asked whether he had discussed a merger with Havas with French financier Vincent Bollore, a major shareholder in both Aegis and Havas, Napier said: “As far as these Havas rumours are concerned... they haven’t actually come up in discussion between Mr Bollore and myself.”

He said Bollore would not put forward any candidates for two non-executive board positions that need to be filled.

Bollore said this month he was “still thinking” about the fate of Aegis and Havas and said Aegis’s new management should allow the company to develop efficiently. He has described the relationship between the two companies as a “long love affair”.

On the possibility of divesting market-research arm Synovate, which he said had few synergies with the rest of the company, Napier would only say he had been busy getting the company in shape since taking over at the end of November.

Media-buying arm Aegis Media reported organic revenue growth of 6.1 percent, despite a decline at its Carat U.S. unit, while operating profit grew 3 percent.

Synovate increased revenues by 5.1 percent organically, and reported 13.1 percent constant-currency operating-profit growth.

Napier said Aegis should announce a new CEO by end-2009, and said he had no interest in the job himself on a permanent basis.

Reporting by Georgina Prodhan; Editing by Erica Billingham, Dan Lalor, John Stonestreet $1 = 0.7020 pound

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