Dentsu Inc. Mulling Realignment To Become Pure Holding Company

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<Dentsu's world headquarters tower in Tokyo. Credit: Courtesy Dentsu Dentsu’s world headquarters tower in Tokyo. Credit: Courtesy Dentsu [/caption]

Japan-based Dentsu Inc.—parent of Dentsu Aegis Network, which owns agencies including 360i and Carat—recently announced that it is considering becoming a pure holding company.

Dentsu Inc. aims to make the changes effective January 2020.

Currently, Dentsu Inc. operates both as a holding company (holding shares of subsidiaries) and an operating company (running Japan-based ventures like Dentsu Ad-Gear, an ad firm specializing in out-of-home media and store promotions).

A restructuring would create a pure holding company with all operating divisions, including Dentsu Aegis Network, reporting into it.

Dentsu Inc. created Dentsu Aegis Network to manage its non-Japan operations after it bought Aegis Group in 2013. With its international expansion, Dentsu Inc. now generates a majority of its revenue outside its home market.
Dentsu Inc. is the world’s fifth largest agency company, according to Ad Age Datacenter. The top four — WPP, Omnicom Group, Publicis Groupe, Interpublic Group of Cos. — already operate as holding companies.

The potential changes were announced the same day as Dentsu Inc. reported second-quarter earnings. The company saw organic growth of 5.9 percent in the second quarter, while Dentsu Aegis Network saw organic growth of 4.5 percent in the second quarter.

In a statement, Dentsu Inc. President-CEO Toshihiro Yamamoto said transformation is needed if the group wants to see sustainable growth beyond 2021 “in a rapidly changing society.”

“We have begun to make and analysis of the Group’s holding structure going forward, the aim of which is to ensure that Dentsu Group’s governance and organization is fit for purpose, aligned with the demands of a fast-changing business environment and rapidly evolving client needs,” he said in a statement. “We remain upbeat and optimistic about the prospects for Dentsu Group in 2018 and beyond.”

Analyzing the group’s structure will allow Dentsu to respond to changes in the business environment, help it meet stakeholders’ expectations and strengthen its governance and increase corporate value, the company said in a statement.

Credit: Adage

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