Is Ipsos poised to buy Synovate from Aegis for €550m?

A rather interesting rumour is doing the rounds of the City. And it is this: Aegis, the media buying group, is about to divest its market research operation, Synovate, for a princely €550m (£481m). The lucky recipient? Paris-based global market research empire Ipsos.

While I have no idea whether any deal will go through, let’s say it’s not a surprise that the two parties should be talking. After all, we’ve been here before – or at least, somewhere very nearby.

Back in 2009, Aegis launched a formal strategic review to determine whether or not to sell Synovate. At the time, GfK was felt to be the most likely buyer. GfK – privately held but the world’s fourth largest MR group even so – was still smarting after it came off second best to WPP in the acrimonious £1.1bn bid battle for Taylor Nelson Sofres.

But it might just as well have been Ipsos, the fifth largest, that was doing the talking. Both MR groups are in the grip of the same strategic imperative: they need to grow bigger in the wake of the 2008 TNS deal, which catapulted WPP to near top position in the world market research league table, just behind Nielsen. The consolidation question is not a ‘whether’ but a ‘when’.

What’s more we know the Ipsos management team admires Synovate and believes it would be a good fit. Don’t just take my word for it. In late 2005 Ipsos’ chairman and chief executive Didier Truchot publicly described Synovate as “a very nice and dynamic organisation.”  Of course, he didn’t go so far as to say he would actually buy it. Then again, he didn’t say he wouldn’t. He merely pointed out that it was “a little too early” to entertain such a possibility.

Truchot was at it again in 2009, when announcing a robust set of results for the previous year: he danced around the idea of buying Synovate without actually saying it.

Perhaps five-and-a-half years has proved long enough to mature his plan.

All of which does little to shed light on Aegis’ motives for selling the business, if that is what it is doing.

Admittedly, the market research division is currently an underperformer. In the latest, Quarter 1, financial results, the Media division turned in an impressive 10.1% improvement in sales, well ahead of the 7% analysts had been expecting. Synovate, on the other hand, undershot, if only by a small amount.

Furthermore, divestment would provide more ammunition in the war-chest. Aegis chief executive Jerry Buhlmann has already embarked on a strategy of shoring up Aegis’ position as a pure-player global media buyer with the £200m acquisition of Mitchell Communications.

But there is a wild card in all of this. What of 27% Aegis stakeholder Vincent Bolloré? Despite his very public disavowals of any further interest in a takeover, Aegis would surely become more, not less, tempting as a target. After all, what Havas – of which he is president and the principal shareholder – most needs is a more effective media buying operation.

UPDATE 6/6/11: Evidently the rumour was true: Aegis has just confirmed it. What matters, now the veil of secrecy has been stripped from the talks, is whether Ipsos is allowed a clear run at the acquisition. Or will others, such as Publicis Groupe, barge in with better terms? Anyone interested in the financials (Ipsos is about twice the size of Synovate) might care to look at Bob Willott’s newsletter on the subject.

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