Is Havas big enough for Aegis?
Havas produced financial results for the first half of 2011 that represent something of a curate’s egg and leave open the question of whether there is any realistic prospect of the group getting together with Aegis.
Revenue growth was disappointing when compared with its main global competitors. But it has managed to improve its operating profit margin a little, and there is scope for further improvement still.
On the positive side, the Havas balance sheet is surprisingly robust at present, having reduced its net borrowings progressively over the years, helped by a number of disposals some time ago.
In terms of stock market capitalisation, Havas remains smaller than Aegis. That may seem surprising when set against the profits earned by each group. Havas reported a post-tax profit of £47 million for the half year while Aegis achieved a post-tax profit of about £25 million after stripping out the Synovate element. However, it seems more than likely that the £1.7 billion market capitalisation of Aegis may decline a little after its shareholders receive their share of the Synovate sale proceeds.
Certainly on current performance it would be hard to envisage any agreed marriage in the shape of merger without the French finishing up as the more dominant partner.