Dentsu said it had set its pre-market price of £2,411 a share for its initial public offering of 135,000 shares. The price gives Dentsu an IPO value of £325.7m, boosting its market capitalisation to £3.4bn.
Dentsu plans to offer 25,000 new shares ahead of the listing, bringing the number of shares outstanding to 1.39m. A further 110,000 existing shares will be sold to the public in a secondary offering. The majority of those will be sold in Japan with the remainder offered overseas.
There had been some fears that the IPO might have been cancelled because of the downturn, but as it goes ahead it has been significantly scaled back. It had been expected at one stage to seek to raise around £1.1bn.
The relatively small size of the flotation is being seen as much as a strategic move as it is a financial one by analysts. The listing will give Dentsu the extra cash it needs to compete with rivals WPP Group and Omnicom Group. Although Dentsu dominates the Japanese advertising market, it has traditionally been weak. It is likely to use the cash to help fund acquisitions in the US and Europe, where it already owns 20% of B|Com3.
Earlier this year in the UK, Dentsu merged its two UK agencies, CDP and travissully. The merger came less than four months after CDP lost its showpiece £20m Honda account.
The merger created a new agency called cdp-travissully with billings of around £40m. Many industry observers were surprised that Dentsu did not move ahead and rebrand the agency under the Dentsu name.
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