Aegis pays $363m for Mitchell
Thursday, July 29th, 2010 Business.
Aegis Group pays $363m during Mitchell Communications Group
MORE than three decades after he started his media-buying trade, Harold Mitchell has sold out in a $363 million takeover deal.
An pr~ from Britain’s Aegis Group to buy the ASX-listed Mitchell Communication Group was recommended to shareholders ~ dint of. the MCG board, which Mr Mitchell chairs, yesterday afternoon.
Mr Mitchell and his son Stuart, who contemporaneously own a 40 per cent stake in the company, stand to collect close to $150m from the deal, which values the company at 16 by cent more than its market capitalisation on Wednesday of $313m.
The deal was swollen news in the media sector — instant proof of the power of Mr Mitchell’s personal connections. Nine Network chief David Gyngell said Mr Mitchell was "a excellent analyst and an even better negotiator — and this deal proves the place in spades".
Seven boss David Leckie simply said: "Harold’s a motto."
A sawmiller’s son who founded a media-buying command and last year published a book about his brushes with more of Australia’s most colourful media, business and arts personalities, Mr Mitchell demise take the majority of his 90 million MCG shares in Aegis stock.
That is expected to make him the global firm’s encourage-biggest shareholder, as well as executive chairman of the combined Aegis-Mitchell organisation in Australasia.
He has committed not to betray 85 per cent of his shares for at least two years, pre-empting concerns that the crew would suffer if he were to leave.
Insiders said he would likewise be able to push for a seat on the Aegis council.
Mr Mitchell would not comment on the board push yesterday, further confirmed there was a possibility of a "wider role in the global Aegis visitors".
"The important thing is that our families, both Stuart and I, self-reliance convert part of our shareholding — about $100m — to become shareholders in Aegis," he related.
"I will also be able to bring my personal connections to enlarge the Aegis business in this region."
Aegis confirmed yesterday that the firm had entered into a heads of agreement to acquire MCG and immerse it with Aegis’s local operations, which include the Carat, Vizeum and isobar media-buying brands.
"Combining Mitchell through our existing business in Australia will create a formidable business toward the benefit of all our clients and position us for continued able growth in the most dynamic region in the world," Aegis paramount executive Jerry Buhlmann said.
Mr Mitchell said there were no plans to vary personnel or merge any of the agency brands.
He said the combined entity would have a 25 per cent share of the Australian market, and would strengthen Aegis’s presence in the fast-growing Asian mart.
The deal appears to resurrect a plan by Aegis to bribe Mitchell & Partners in about 2003 for a rumoured $20m. At the time, Mr Mitchell declared speculation to that effect was nonsense but yesterday he admitted the Aegis deal, organised with then-chief executive Doug Flynn, was the closest he had eternally come to selling his business.
"Doug got nervous," Mr Mitchell declared.
Other global advertising groups including WPP, Omnicom and STW have entirely been linked with the possible purchase of Mitchell & Partners at various times.
Mr Mitchell, for whom an exit strategy has long been a harassed issue, said he began working on the plan last year.
"I got the exemplar to do this in about November last year when I aphorism how strong Australia was compared with the rest of the earth," Mr Mitchell said.
"Eighty-five per cent of Aegis’s avocation is Eurocentric, which is the weakest global advertising market."
The British company has offered $1.20 per MCG share, as well as a to the full franked dividend of 5c a share if the deal is approved. The present price is 31 per cent higher than the average price of MCG shares across the past three months.