Dentsu is buying marketing group Aegis for 3.2 billion pounds ($5 billion), the biggest deal in its history as it seeks to expand outside its home market with the British firm's European and digital business.
The new entity will take on other global media networks like WPP, Publicis and Omnicom Group. Dentsu will pay 240 pence for each Aegis share, a 48% premium on its Wednesday closing price. Aegis jumped 46% on the news.
It will pay a 48 percent premium to secure the takeover after European groups WPP and Publicis snapped up rival agencies in recent years. The deal means Japan is the second most active overseas acquirer this year with more than $20 billion worth of deals, behind the United States but surpassing all major European nations and China in outbound M&A.
Analysts described the deal as a perfect strategic fit after Aegis Chief Executive Jerry Buhlmann turned the group around to grow in Asia Pacific, the U.S., emerging markets and digital marketing in recent years.
Aegis, which has Coca-Cola, GM and Disney on its client list, has long been seen as a potential takeover target, although it had for years been linked to the French group Havas as French financier Vincent Bollore was the largest shareholder in both. It has performed strongly since selling its Synovate market research unit last year to focus on the faster growth areas of media buying and selling and digital communications.
Analysts said the deal underlined the value present in advertising companies despite a tough economic climate and could lift the whole sector. Morgan Stanley advised Dentsu on the deal, while Greenhill and J.P. Morgan Cazenove advised Aegis.