Credit: Micah Williams via Unsplash
Dentsu's search for buyers of its international business is reportedly close to collapse.
The advertising giant's efforts to sell its UK-based international operations have stalled after potential trade buyers and private equity suitors walked away from discussions, according to the Australian Financial Review (AFR).
Prospective buyers, including major advertising groups and private equity firm Apollo, dropped out of discussions last year, leaving only Bain Capital in the running.
However, a person close to Bain told the AFR that the US private equity firm was "still interested, but with significant reservations."
The publication also reported that Dentsu president Hiroshi Igarashi has informed board members that Bain was unlikely to continue with the discussions, and that the sale process had fallen apart.
Japan's largest advertising agency is expected to tell investors at its full-year results meeting next month that attempts to secure a sale have failed and that the company would seek to turn around its struggling international operations on its own.
The group has already unveiled plans to restructure the international businesses, including cutting more than 3,400 jobs.
"With regards to the international business, the company is rebuilding the business foundation and re-evaluating underperforming businesses," Dentsu said in a statement.
"The company is also exploring strategic alternatives to enhance corporate value, but no decision has been made at this time.
“Should any matters arise that require disclosure, the Company will make an announcement in a timely and appropriate manner.”
The struggle follows repeated failures to turn around the operations in recent times and a sharp drop in shares overnight.
Dentsu’s shares tumbled in Tokyo trading, shedding about 11 per cent after reports surfaced that talks to offload its international business had broken down.
The sell-off wiped significant value from the Japanese holding group, as investors weighed ongoing pressure on its overseas operations and softer growth outside its domestic market.
Dentsu has been struggling to turn around its international operations for more than two years.
The company cut 3,400 jobs, or 8% of its international headcount, last year as it reported negative organic growth of 0.2% for the half year to June.
CEO Hiroshi Igarashi in August 2024 described reforming the international business as "an urgent issue".
The global advertising group has been exploring strategic alternatives including potential partnerships or investment from external parties.
Investment banks Mitsubishi UFJ Morgan Stanley and Nomura Securities were hired to advise on options for the struggling international division.
The company's Japan business has continued to perform strongly with organic growth above 5%, in contrast to negative growth across all international regions, including Australia.
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