Dentsu CEO responds to international sale speculation: ‘No decisions have been made’

Dentsu has responded to M&A speculation by telling staff that “no decisions have been made” yet about selling its international arm, and it is aiming to “rebuild” the business outside Japan “on our own”.

Hiroshi Igarashi, the chief executive, used an internal memo to urge employees to keep their focus on clients who “remain at the heart of everything we do” as the agency group considers its options. “Let us stay focused” and “reassure our clients with our dedication and delivery”, he wrote.

The Japanese group was making its first comments since news broke six days ago in the Financial Times that Dentsu has appointed investment banks to explore a potential sale of the international business, among a number of options.

In a candid admission, Igarashi acknowledged that the FT article had “prompted many of you to reach out to me, sharing personal reflections and client feedback”, and he thanked them for “your openness and engagement”.

Dentsu’s international business has been underperforming for multiple years in a row, and the group said at its Q2 earnings in mid-August that it was considering a number of options, which could include a sale.

He emphasised in his staff memo that “our top priority is to restore the entire group to a growth trajectory” and “restoring profitability means more than managing costs in a single year”.

He went on: “This involves making difficult decisions, including re-evaluating underperforming businesses and rebuilding our business foundation.

“While we aim to rebuild our international business on our own, we recognise that fundamental restructuring requires taking bold measures.

“As part of this, we are exploring all options, including comprehensive and strategic partnerships with third parties.

“This means being open to different ways of operating—whether that’s how we’re organised or how we’re funded.

“We’re also open to working with other companies if it helps us to recover faster. These ideas are still just possibilities.”

Igarashi added, “Despite speculation, no decisions have been made. Should any be reached, we will communicate them promptly and transparently.”

Dentsu employs about 67,000 people globally.

He was keen to switch the focus back to clients, saying: “Success depends on each of us — thinking deeply about our clients and delivering outstanding service that drives their growth.”

Jay Pattisall, vice-president and principal analyst at Forrester, said earlier that a sale of Dentsu’s international business could “dramatically impact” how the agency industry looks in the future.

In a blog post that was published before Igarashi’s memo, Pattisall said any reshuffling of Dentsu’s operations will “reconfigure the concentration of buying power, access to technology, and the number of CMO partners' choices”, determining whether future marketers select from “among the big three or four” agency groups.

The M&A talk comes as Omnicom prepares to complete its acquisition of Interpublic, leapfrogging Publicis Groupe and WPP by revenue to become the world’s largest agency group and forming a new top three—ahead of Dentsu, Havas and others.