On November 14, 2025, Dentsu Group announced its third-quarter results for the fiscal year ending in December. In discussing the company’s management over the past few years, it is impossible to overlook the 2013 acquisition of the Aegis Group for ¥400 billion. In this article, we take a closer look at why the Aegis acquisition ultimately failed.
Planned Profit Recovery Structure
Initially, Dentsu had envisioned the following strategies for recovering profits through the acquisition of Aegis:
Profit Recovery by Region
- Americas: Expand digital advertising and integrated marketing services in the North American market.
- EMEA (Europe, Middle East, Africa): Scale up operations and pursue cross-border business opportunities.
- APAC (excluding Japan): Expand digital services across the Asia-Pacific region.
Profit Recovery by Service Line
- Shift toward digital and data-driven services to improve profit margins through high-value offerings.
- Transition away from traditional mass-media-centered operations to secure global profits.
With this plan, Dentsu expected to recover the ¥400 billion acquisition cost over the medium term.
Actual Profit Recovery by Region and Year (Approx., ¥100 million units)
Calculation Method:
- Net profit = Operating profit − Goodwill impairment
- Cumulative = Sum of net profits from 2020 up to the given year
- Example: EMEA cumulative net profit in 2022 = 2020 net profit + 2022 net profit
Data Sources:
- Dentsu Annual Securities Reports (2014–2025)
- IR and financial briefing materials (impairment amounts, operating profit)
- Press releases and news reports (goodwill impairment related to the Aegis acquisition)
EMEA (Europe, Middle East, Africa)
- 2020: Operating profit ¥50.1B, Goodwill impairment ¥42.1B → Net profit −¥92.1B
- 2022: Operating profit ¥52.0B, Goodwill impairment ¥53.1B → Cumulative net profit −¥193.2B
- 2024: Operating profit ¥54.0B, Goodwill impairment ¥71.3B → Cumulative net profit −¥256.4B
→ Profit recovery was delayed post-acquisition, with large-scale impairments.
Americas (North & South America)
- 2020: Operating profit ¥60.0B, Goodwill impairment ¥57.1B → Net profit ¥2.9B
- 2022: Operating profit ¥61.0B, Goodwill impairment ¥68.9B → Net profit −¥7.9B (cumulative −¥5.0B)
- 2024: Operating profit ¥62.0B, Goodwill impairment ¥57.1B → Cumulative net profit −¥6.0B
→ Almost flat cumulative profits; limited recovery.
APAC (Asia-Pacific, excluding Japan)
- 2020: Operating profit ¥20.0B → Net profit ¥20.0B
- 2022: Operating profit ¥109.3B, Goodwill impairment ¥11.7B → Net profit ¥97.6B
- 2025: Operating profit ¥23.0B → Cumulative net profit ¥67.4B
→ Minimal impairment impact; profits steadily accumulated.
Japan
- 2020: Operating profit ¥120.0B → Net profit ¥120.0B
- 2022: Operating profit ¥125.0B → Cumulative ¥245.0B
- 2025: Operating profit ¥135.0B → Cumulative ¥510.0B
→ Stable and reliable profit recovery.
Key Points
- Cumulative net profit is calculated by subtracting goodwill impairment from operating profit and summing annually.
- EMEA cumulative net profit of −¥256.4B shows delayed recovery post-acquisition.
- Americas slightly negative, APAC minimally affected, Japan stably profitable.
- The primary cause of failure was goodwill impairment:
- EMEA: ~¥153B
- Americas: ~¥50–70B
- APAC: ~¥9B
- Out of the expected ¥400B profit recovery, roughly half could not be realized due to EMEA and Americas deficits.
Reasons for Goodwill Impairment
1. Overestimated Client Potential
Dentsu had high expectations for global key clients to serve as revenue pillars:
- Coca‑Cola, Dell, Heineken, IKEA, Kellogg’s, Microsoft, Panasonic, P&G, Shiseido, Toyota, American Express, Beiersdorf, Burberry
These clients were expected to drive post-acquisition revenue growth through cross-border projects and long-term service expansion (media buying → digital → data analytics).
Reality: Revenue expansion did not meet expectations due to increased competition, price declines, shifts in ad media, and clients’ budget constraints. Cross-selling and regional revenue growth were limited.
2. Intensified Competition
Global agencies were highly competitive in EMEA and Americas. While major competitors were anticipated (WPP, Omnicom, Publicis, Havas, Interpublic), the actual intensity of competition, pricing pressure, and client negotiation power were underestimated, delaying profit recovery.
3. Cultural and Business Practice Differences
Japanese long-term relationship-oriented approaches did not always work in EMEA and Americas, where clients often base decisions on short-term performance, price, and outcomes, forcing agencies into service and price competition.
4. Foreign Exchange Effects
Currency fluctuations affected profit recovery:
- EMEA: Euro and GBP revenues converted to JPY reduced profits under a stronger yen.
- Americas: USD revenues were relatively stable, but JPY conversion created volatility.
- APAC: Multiple currencies had smaller but noticeable effects.
Overall, EMEA was most impacted, but all global regions experienced FX-related profit volatility.
Summary
Dentsu originally planned to recover ¥400B in profits across regions and service lines via the Aegis acquisition. However, goodwill impairments in EMEA and Americas made it impossible to achieve the expected profit recovery.
Main causes of goodwill impairment:
- Overestimated potential of global clients
- Intensified overseas competition
- Japanese business practices not applicable abroad
- FX-related profit pressure
These factors combined to achieve only roughly half of the originally projected profit recovery.
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