Aegis CEO dismisses Havas merger speculation

BARCELONA Nov 18 (Reuters) - The chief executive of British advertising agency Aegis (AEGS.L) dismissed speculation a merger with French rival Havas (EURC.PA) was on the cards, and said he was focusing on running the business in still-tough conditions.

John Napier said on Wednesday he was assuming only modest growth for 2010 but the company's market-research division Synovate, hit unexpectedly hard late in the downturn, was returning to profitability.

"You can speculate endlessly but there's no substance in these speculations whatsoever," Napier told an investor conference in Barcelona when asked about Havas.

"It's the board's job to run the company in the interest of its shareholders. Nobody's standing around offering great big bags of gold," he said.

Aegis and Havas have a common major shareholder, French financier Vincent Bollore -- a fact that has fuelled repeated speculation the companies will merge to better compete with bigger rivals such as WPP (WPP.L) and Publicis (PUBP.PA).

Havas reignited speculation last month by launching a 350 million euro ($522 million) bond. Management said the issue was undertaken to diversify funding, lengthen its debt-maturity profile and give it means to continue its growth.

Napier reiterated he believed Synovate's problems were due to customers deferring rather than cancelling orders and said he did not think there had been a fundamental shift in buying patterns or attitudes to market research.

"I'm reaffirming my forecast that Synovate will return to profitability and is returning to profitability as we speak," he said. Aegis also contains marketing division Aegis Media.

Napier said there was evidence the recession-hit advertising market was bottoming out but cautioned on over-optimism about 2010. "Without being a naysayer or a doomsayer, we will repeat our defensive stance in 2010 and assume a very modest rate of growth. If growth is better, fine, but I wouldn't be assuming a significant upturn in 2010," he said.

Aegis's first-half revenue fell 10.8 percent organically to 637 million pounds ($1.07 billion) as companies continued to rein in marketing budgets, but the decline slowed in the second quarter.

Aegis was due to give a trading update on Thursday. (Reporting by Georgina Prodhan; Editing by Dan Lalor) ($1 = 0.6710 euro = 0.5946 pound)