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Advertising group Dentsu’s efforts to sell its international operations are close to collapse after potential trade buyers and private equity suitors walked away from talks, in a development that is set to intensify pressure on the Japanese firm’s executives.
The FT reported last year that Dentsu was exploring the sale of its UK-based international business, which made more than $4.5bn in net revenues in 2024, as part of a strategic review.
Prospective buyers to have held discussions with Dentsu included major advertising groups and a range of private equity firms. But the last trade buyers and private equity firm Apollo dropped out of talks last year, said three people familiar with the matter, leaving only Bain Capital.
A person close to Bain said the US private equity firm was “still interested, but with significant reservations”. Apollo declined to comment and Bain did not respond to a request for comment.
However, Dentsu president Hiroshi Igarashi has informed board members that Bain was unlikely to continue with talks over a deal and that the sale process had fallen apart, according to people close to the advertising group’s top management.
Dentsu’s shares fell more than 10 per cent in Tokyo after Wednesday’s news.
Japan’s largest advertising agency is expected to tell investors at its full-year results meeting next month that its attempts to secure a sale have failed, the people added, 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. “At the same time, the company is exploring strategic alternatives to enhance corporate value, but no decision has been made at this time.”
Mitsubishi UFJ Morgan Stanley and Nomura Securities have been advising Dentsu on the deal.
Dentsu, whose outsized control of the Japanese advertising market gives it significant influence within the country’s business and political circles, has struggled to project that dominance outside Japan.
The struggle to offload the international business follows repeated failures to turn around the operations and leaves the Japanese group confronting an increasingly dismayed investor base that includes Oasis, an often vocal activist shareholder.
A deal to sell the business would have unwound a £3.2bn transaction to acquire UK media group Aegis in 2012. Dentsu’s international operations also include London-based Tag Group, a digital marketing production company.
Two people close to Dentsu said the group feared shareholders might attempt to unseat Igarashi, who also serves as its global chief executive, by voting against his reappointment at the company’s annual shareholders’ meeting in March.
Potential buyers had deemed Dentsu’s international business too difficult to turn around given the downward trend in its performance, the people said.
One Dentsu shareholder said they had “little confidence” in the company’s ability to turn around the international business and that the whole group was suffering from an outdated approach to a market undergoing fundamental upheaval.
Dentsu is facing stiffer competition from the combination of IPG and Omnicom, which merged last year, and the growing dominance of Publicis.
Meanwhile, the traditional roles of advertising firms are being disrupted by the adoption of AI tools, which can carry out tasks faster, cheaper and often better than existing processes.
The deal would have meant a significant retrenchment for Tokyo-listed Dentsu, which has long held ambitions to compete with global rivals such as Publicis.
Igarashi told investors last summer he was “acutely aware that reforming the international business is an urgent issue . . . I deeply regret this situation and offer my sincere apologies on behalf of the company.”