Ipsos Sues Aegis over Synovate Sale

Ipsos has filed a lawsuit in London's High Court against Aegis, claiming that the marcoms giant failed to disclose tax and fraud probes at Synovate, before it sold the company for £525m ($792m). As a result, Ipsos is seeking up to £65.8m ($100m) in compensation from Aegis.

Ipsos completed its acquisition of Synovate in October 2011, forming the third largest market research company in the world.

However, the company is now claiming that Aegis failed to pay share bonuses to Synovate staff, in order to 'artificially inflate' profits, while also providing misleading details about client contracts. In addition, Ipsos alleges that accounting irregularities in Romania, and tax probes in at least three countries were not disclosed prior to the sale, along with an investigation into fraud at Synovate's Mexican business, where it is claimed that from 2008 to 2011, the business 'fraudulently inflated its revenue and profit figures' and employees entered into 'ghost contracts'. According to Ipsos, the issue is currently subject to a criminal investigation in Mexico.

Ipsos says it would not have paid the asking price for the division if these issues had been disclosed at the time of the sale, and it is seeking up to $100m in compensation from Aegis.

In response, Aegis says it did not inflate profit figures, and that information about Synovate's customers was 'fairly disclosed to Ipsos' in the disclosure letter. Aegis also claims to have passed on a report about the issues at Synovate's Mexican business, and says there was no reason to pay the bonuses to Synovate staff in the lead-up to the company's sale.

Web sites: www.ipsos.com and www.aegismedia.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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