Omnicom to Acquire Interpublic in Deal That Will Reshape Advertising Industry – WSJ
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Source: Suzanne Vranica and Gareth Vipers | Wall Street Journal
Omnicom Group will acquire Interpublic Group in a deal that will create the world’s largest advertising business, the companies confirmed Monday.
A combined entity would have net revenue of more than $20 billion, based on 2023 figures for each company, and include storied ad agencies such as TBWA Worldwide and McCann Worldgroup. Their client rosters include Amazon, AT&T, PepsiCo, Unilever and Volkswagen.
The Wall Street Journal reported Sunday that the companies were in advanced merger talks. The stock deal values Interpublic at more than $13 billion.
It is intended to help the combined company better compete with tech behemoths such as Google and Meta Platforms, which have emerged as dominant forces in the advertising business and stand to push even further into Madison Avenue’s territory with the rise of generative AI. This technology is expected to enable them to handle more of the creative development for brands—a cornerstone of advertising agencies.
The deal “allows us to take control of our own future, rather than wait for technology to impact it in ways that you can’t anticipate today,” Omnicom Chairman and Chief Executive John Wren said during a call with investors.
Wren said Omnicom and Interpublic “share highly complementary cultures and core values, including a foundation belief that the power of ideas are enabled by technology and data.”
Interpublic CEO Philippe Krakowsky highlighted the analytics prowess of the joint company. “Using expansive behavioral data on consumers, we can help clients build a view of their customer and prospect that informs every stage of the marketing life cycle,” he said.
Under the all-stock deal, Omnicom would exchange 0.344 shares for each Interpublic share, with Omnicom shareholders owning 60.6% of the combined company.
Shares of Interpublic rose 7% to $31.34, while Omnicom shares slid 8.7% to $94.41.
The companies expect the deal to generate cost synergies of $750 million within two years, with savings coming from a combined real-estate footprint, tech efficiencies, shared service centers and offshoring.
It is intended to help the combined company better compete with tech behemoths such as Google and Meta Platforms, which have emerged as dominant forces in the advertising business
The merger of the world’s third- and fourth-largest ad companies will usurp WPP as the industry’s biggest player and bring together some of the world’s best-known ad brands.
Omnicom and Interpublic have been behind some of history’s most iconic ads, including Apple’s “Think Different,” Mastercard’s “Priceless,” L’Oreal’s “Because I’m Worth It” and the “Got Milk” slogan for the California Milk Processor Board.
Wren will remain chairman and chief executive of Omnicom, while Phil Angelastro will continue as chief financial officer. Krakowsky and Daryl Simm will serve as co-presidents and chief operating officers of Omnicom. Three current members of Interpublic’s board, including Krakowsky, will join the Omnicom board.
The combined company will retain the Omnicom name and trade under the OMC ticker on the New York Stock Exchange. The deal is expected to close in the second half of 2025.
A deal between Interpublic and Omnicom could face government scrutiny, as the combined company would be a dominating force in the ad-buying space. Global ad spending is expected to top $1.03 trillion, excluding political advertising, according to GroupM, the ad-buying arm of WPP.
“We are pretty confident that this is not going to create any regulatory issues,” Wren said. He said the incoming Trump administration seems more business-friendly.
A small number of conglomerates are behind the majority of television, YouTube and billboard advertising. As well as producing the advertisement, the companies own the firms that sell the ad space, use consumer data to craft and target ads, manage influencer marketing campaigns, and help brands with their e-commerce efforts.
Omnicom includes agencies TBWA, BBDO and FleishmanHillard, and ad buyer Omnicom Media Group. Interpublic owns agencies including Weber Shandwick, McCann, FCB and ad-buying firm Mediabrands.
Once dominated by creative agencies that crafted catchy jingles, ad companies have spent the past decade buying up assets in the tech, data and e-commerce space as they sought to keep up with advertisers’ demand for new services and an influx of new competition from tech giants and consulting firms such as Accenture.
Publicis Groupe has outperformed its rivals thanks in part to an aggressive buying spree focused on areas such as tech and data. Over the past decade, it spent billions snapping up digital consultancy Sapient, data broker Epsilon, influencer marketing platform Influential and more.
Publicis has seen its stock climb about 33% over the past year, while Interpublic’s shares are roughly flat during the period, including the boost from the deal news. Omnicom’s stock is up about 15% over that time.
While Omnicom mainly stuck to smaller deals to build out its tech and data offerings, it did shell out $835 million earlier this year for e-commerce company Flywheel, which helps brands sell on digital marketplaces operated by companies including Amazon.com, Walmart and Alibaba.
Interpublic has also been buying up technology assets, including paying $2.3 billion in 2018 to buy data broker Acxiom’s Marketing Solutions business. That gave it access to anonymized customer data—and was one of the key assets that attracted Omnicom to Interpublic, according to the companies.
Data-driven, personalized marketing requires a “whole different model of agency,” said Michael Seidler, chief executive of Madison Alley, an M&A advisory firm.
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This article was originally published on the Wall Street Journal – navigate to the original article here.
