Aegis Group PLC (AGS.LN) Monday confirmed it is in discussions with Paris-based Ipsos SA (IPS.FR) about a potential sale of its Synovate market research unit, a move that would help the U.K.-based advertising and marketing firm's push to expand in emerging markets and digital.

Confirmation of the talks could also reignite speculation about a wider break up. Aegis has frequently been touted as a potential merger target for one of its rivals, notably French advertising group Havas SA (HAV.FR) whose chairman, billionaire French businessman Vincent Bollore, is a major shareholder in both groups.

While Bollore recently told Dow Jones Newswires that a tie-up with Aegis was "no longer necessary," he also said he is keeping his options open.

A weekend press report said Synovate is worth around GBP500 million. Aegis declined to comment on Synovate's value. Ipsos, the world's fifth-largest global research company, declined to comment ahead of a board meeting Monday morning. However, a spokesman said the company would release a statement after the Paris stock market closes.

Aegis in March said Synovate operating profit grew 23.6% in 2010, to GBP45.6 million from GBP36.9 million after a 6.7% rise in sales, and that it had made significant steps in its aim to consolidate the unit's position in "a changing market dynamic." Clients in the year included Unilver NV (UNA.AE), Coca-Cola Co. (KO) and HSBC Holdings PLC (HBC).

Operating profit across Aegis, which also owns Carat, Europe's largest media buying agency and digital planning group Isobar, was GBP101.5 million for the year.

According to the Aegis website, Synovate employs more than 6,000 people in 62 countries.

"In response to recent speculation, the Board of Aegis Group confirms that it is in discussions with Ipsos in relation to a potential transaction regarding its market research business Synovate. There can be no certainty that any agreement will be reached," Aegis said.

For many years, investors had been waiting for Bollore to merge Havas, in which he holds a 32.9% stake, with London-based Aegis. Industry insiders saw sense in a tie-up, notably because a merged entity would have a much larger media buying capability and be able to compete better with larger rivals such as Publicis Groupe SA (PUB.FR) or Interpublic Group of Cos (IPG).

WPP PLC (WPP.LN) in previous years was also touted as a potential buyer of Aegis, after Chief Executive Sir Martin Sorrell said he was interested in Synovate, but WPP instead bought Taylor Nelson Sofres in 2008 in a GBP1.1 billion deal.

The potential sale of Synovate would help Aegis Chief Executive Jerry Buhlmann's strategy to further boost the group's presence in emerging markets and digital. The company accelerated its M&A activity over the past year after it bought Australia's Mitchell Communication Group for GBP229.1 million, the group's largest deal in eleven years, as well as a stake in Russian market research agency COMCON.

Buhlmann became CEO in March last year 16 months after his predecessor left, and quickly signalled his attention to seek bolt-on deals while not ruling out occasional larger transactions.

Still, in May Aegis also said it would keep a clear focus on cost control to counter upward pressure on staff costs.

Altium Securities said the cash generated from any sale of Synovate would substantially enhance Aegis's ability to pursue its strategic goal to grow internationally, while Panmure Gordon said the mooted GBP500 million valuation "is materially ahead of our own," adding that Aegis is its top pick for the year in the media sector. Panmure raised its target price to 190p from 175p Monday and kept its buy recommendation on the stock.

Aegis shares opened sharply higher Monday, and by 0939 GMT were trading up 6.9%, or 10p, at 151 pence, giving the company a market value of GBP1.94 billion and making it the biggest gainer in a slightly lower FTSE-250. Ipsos shares were up 1.5% to EUR34.55 in Paris.

-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@dowjones.com

(Michele Maatouk in London and Ambroise Ecorcheville in Paris contributed to this article.)

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