Ad giant Omnicom takes aim at Big Tech, AI era with $13 billion Interpublic deal
Corrects spelling of "client" in paragraph 14
Deal creates world's largest advertising agency
All-stock offer at 21.6% premium to Interpublic's last close
AI reshaping ad business with cheaper, faster offerings
By Deborah Mary Sophia and Urvi Dugar
Dec 9 (Reuters) -Omnicom Group OMC.N has struck a $13.25 billion all-stock deal to buy rival Interpublic Group IPG.N, creating the world's largest advertising agency as traditional players look to better compete with Big Tech firms amid accelerating use of AI.
The deal, announced on Monday, could attract regulatory scrutiny as it seeks to merge the world's third-largest ad buyer, Omnicom, with the fourth-largest - Interpublic.
Interpublic investors will receive 0.344 Omnicom shares for each share held, or $35.58 based on Omnicom's last close. This represents a premium of 21.6% to Interpublic's close on Friday.
Interpublic's shares, down more than 10% this year, were up nearly 11% in early trading. Omnicom fell 6%.
"We are pretty confident this is not going to create any regulatory issues. The world isn't divided into four companies - you have things like Google, Facebook, Amazon... servicing people's marketing needs," Omnicom CEO John Wren said on a call with analysts.
"Also, there's reason to believe that the change in administration (in the U.S.) will make it more friendly to business."
Regulatory roadblocks had forced Omnicom and France's Publicis Groupe SA PUBP.PA to call off their $35 billion merger in 2013.
Omnicom owns brands such as BBDO and TBWA, while Interpublic owns McCann, Weber Shandwick and Mediabrands. Both companies are based in New York.
The combined company would have revenue of more than $25 billion, based on 2023 figures. It would compete with the UK's WPP WPP.L and Publicis, which generated annual revenue of 14.85 billion pounds ($18.97 billion) and 13.10 billion euros ($13.86 billion), respectively.
Wren will lead the new company, while Interpublic boss Philippe Krakowsky will serve as co-Chief Operating Officer along with Daryl Simm.
COMPETITION FOR AD DOLLARS
Tech giants such as Alphabet-owned Google GOOGL.O and Amazon.com AMZN.O have in recent years attracted marketing dollars away from traditional agencies by offering both advertising tools and marketplaces to buy and sell them.
Soaring use of AI tools that allow businesses to create ads cheaper and faster has squeezed traditional agencies, forcing them to scramble to develop similar in-house tools to retain clients.
"This move 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," Wren said.
Apple, Chanel, Disney and Volkswagen are among Omnicom's customers, while Interpublic's clientroster includes Johnson & Johnson, Levi Strauss, and Barbie maker Mattel.
"An integration of this size would be unprecedented and likely challenging," said MoffettNathanson analyst Michael Nathanson.
Omnicom shareholders will own 60.6% of the combined company. The deal is expected to close in the second half of 2025 and generate annual cost savings of $750 million.
($1 = 0.7827 pounds)
($1 = 0.9453 euros)
Slowing demand weighs on Interpublic stock https://tmsnrt.rs/3ZouIGV
Reporting by Urvi Dugar, Gursimran Kaur and Disha Mishra in Bengaluru; Editing by Andrea Ricci, Lisa Shumaker, Will Dunham and Sriraj Kalluvila
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
