WPP Says It Won't Bid for Advertising Buyer Aegis (Update6)

(Bloomberg) -- WPP Group Plc, the world's second-biggest advertising company, abandoned its pursuit of Aegis Group Plc after the U.K. media buyer rejected a takeover offer of less than 1.56 billion pounds ($2.7 billion.)

The bid from WPP and Hellman & Friedman LLC was ``materially below'' the 140 pence per share that France's Publicis Groupe SA offered in September, Aegis said in a statement today. Publicis, the world's fourth-biggest advertising company, withdrew its offer on Oct. 14. Aegis has a market value of 1.3 billion pounds.

WPP has said it is particularly interested in acquiring Aegis's market research business Synovate. French billionaire Vincent Bollore, who holds a 25 percent stake in Aegis, also wants to increase his holding, newspapers including the New York Times said.

``It's not over yet,'' said Mark Harrington, an analyst at ABN Amro in London. ``This does not lessen the chances for Aegis to be bought. There's clearly an interest for the company.''

Aegis shares fell 3.25 pence, or 2.7 percent, to 117.75 pence in London, while shares of WPP rose 2 percent to 577.5 pence.

WPP has ``been informed that the board of Aegis does not wish to pursue'' any of WPP's offers, London-based WPP said in a statement today. ``Accordingly, WPP announces that it has no intention to make an offer for Aegis.''

Unnamed Third Bidder

In a later statement, WPP said its Nov. 16 offer for Aegis with Hellman & Friedman was worth 130 pence a share. The addition to the ``NewCo'' bidding group of a third suitor, whom WPP didn't identify, would have pushed the bid to more than 140 pence a share, WPP said.

``We will be in a position to update you shortly on the precise structure of the proposed NewCo offer,'' WPP told Aegis directors on Nov. 16, according to the statement.

WPP, whose advertising agencies include Ogilvy & Mather and J. Walter Thompson, in March bought New York-based Grey Global, gaining such clients as Procter & Gamble Co., the world's biggest advertiser.

Media-buying agencies plan and purchase where advertising should appear, working separately from so-called ``creative'' agencies, which make the ads. They negotiate with companies such as television stations, billboard owners and newspaper publishers for the lowest rates.

Aegis purchases advertising space for clients including Cadbury Schweppes Plc and also helps customers plan their marketing activities. Aegis owns the Carat and Vizeum media agencies and Synovate, a market-researcher.

Aegis's market research business would complement WPP's Kantar division, which is the world's fourth biggest market researcher, according to trade publication Inside Research. It would close the gap with Taylor Nelson Sofres Plc, the second-largest researcher behind VNU NV, which owns ACNielsen.

Deadline

Today was the deadline for WPP and Hellman & Friedman to announce plans to bid for Aegis or be barred from an offer for six months, Britain's Takeover Panel said last month.

``Today's announcement was not a surprise, given that WPP and Hellman & Friedman had not made a credible proposal to the board,'' Aegis said in a separate statement.

WPP and Hellman reserved the right to reconsider if a third party announces a firm intention to make an offer for Aegis, the companies said. Richard Oldworth, a spokesman for WPP, declined to comment and Bollore spokesman Michel Calzaroni could not be reached.

``It's more a whimper not a bang,'' said Lorna Tilbian, an analyst at Numis Securities in London. ``It appears the shareholders'' of WPP ``are pleased.''

Bollore, who holds a 25 percent stake in Aegis, has also been interested in increasing his stake, according to reports in the New York Times and the Financial Times earlier this week.

The U.K. Takeover Panel ruled that Bollore is not bound by the six-month restriction imposed on WPP and Hellman, the Panel said in a separate statement today.

Bollore, who also is chairman of French advertising company Havas SA and owns 22 percent of that company, said in an interview in June he intends to build a portfolio of media stocks.

To contact the reporter on this story:
Maria Fredriksson in London at mfredriksson@bloomberg.net