Ipsos acquisition of Synovate likely to conclude by end of August

The deal will probably be concluded by the end of August.

"I'm not at the table and cannot speak definitively, but in my experience it is in the best interest of all parties if these things are not dragged out," said one source who was formerly highly placed at Synovate. "They entered into exclusive talks at the end of June and unless things go wrong, the process should not take much longer than six weeks."

Rumours of the potential acquisition of Synovate by research firms Ipsos and GfK had been circulating for an extended period when Ipsos made an unsolicited bid in early June. On 29 June, it was announced that Ipsos was in exclusive talks with Aegis to buy Synovate for around US$815 million (GBP 500 million).

Last year, Synovate posted an operating profit of US$74 million (GBP46 million).

On 11 July it came to light that private equity firms Doughty Hanson and Cinven had made bids of up to US$980 million. However sources consulted said the bids were unlikely to interfere with the deal as Ipsos and Aegis were already in exclusive negotiations by the time the private equity firms made their move.

"Anyone can spout that they want to acquire a firm without making a formal bid. They don't have to be considered seriously," said one source. "Unless talks between Ipsos and Aegis break down, the private equity firms don't come into play."

The sale of Synovate to Ipsos is one that's privately welcomed by Synovate's senior management, said another source close to the developments. "From what I know of Synovate, even in this climate of uncertainty, it will be a relief for them to leave a media group where market research is not a primary focus and join a market research group," said the source.

Sources agree that overall, there was a lack of synergy between Aegis, Carat and Synovate. "Aegis has always been more of a pure-play media network rather than a conglomerate like WPP or the Omnicom media group. There is plenty of scope for Aegis to return to being a pure media group," commented one source.

The departure of Synovate's former global CEO Adrian Chedore in 2009 saw the exodus of several of the market researcher's senior leaders triggered doubts as to Synovate's continued future with Aegis. The media group then started to "squeeze", said the source, by absorbing selected profitable assets into the group itself and making Synovate an easier sale.

"Overall the acquisition should be relatively painless," said a source. "Ipsos is not interested in reducing costs but is keen on acquiring Synovate for its talent and corporate culture. "There are good people at Synovate and the cultures are compatible."

All parties consulted by Campaign Asia-Pacific agreed that Synovate and Ipsos' businesses were mutually complementary with Synovate strengthening Ipsos' presence in Asia and Ipsos' dominance in Europe aiding Synovate's late-entry to the region.

Based on revenue figures, the combination of Ipsos and Synovate would form the fourth-largest market research business worldwide, after Nielsen, Kantar and IMS Health.

The question now, commented the first source who used to be part of Synovate's senior management, is what Aegis will use the funds generated by the sale of Synovate. "Logically, Aegis will continue to invest in and acquire more media entities. If they don't, the sale of Synovate could turn Aegis into a potentially desirable takeover target."