Omnicom has announced its acquisition of Interpublic Group in a stock-for-stock deal, creating the largest ad agency in the world with a combined annual revenue of nearly $26 billion. While these names may not be widely recognized by the general public, some of their marketing campaigns are iconic, such as 'Got Milk,' 'Priceless,' 'Because I'm Worth It,' and 'Think Different.'
The newly formed company will be valued at over $30 billion and will operate under the Omnicom name, trading under the 'OMC' ticker symbol on the New York Stock Exchange. The merger is expected to bring about significant advantages, including leveraging new technologies like artificial intelligence.
Omnicom's Chairman and CEO, John Wren, expressed optimism about the merger, stating that it will accelerate innovation and capitalize on opportunities presented by new technologies in today's rapidly changing landscape. The combined entity aims to deliver superior, data-driven outcomes to clients by integrating technologies, capabilities, talent, and geographic footprints.
Analysts predict that the merger will position the company strongly in various sectors, including creative, media, specialty healthcare, experiential, and PR. The move towards consolidation in the industry is seen as a positive development following divergent growth trends among agencies in recent years.
Under the terms of the deal, Interpublic shareholders will receive 0.344 Omnicom shares for each share of Interpublic common stock they own. Upon completion of the transaction, Omnicom shareholders will hold a 60.6% stake in the combined company, with Interpublic shareholders owning the remaining 39.4%.
The merger will see John Wren continuing as Chairman and CEO of Omnicom, with Phil Angelastro retaining his position as Executive Vice President and Chief Financial Officer. Philippe Krakowsky and Daryl Simm from Interpublic will serve as co-presidents and chief operating officers at Omnicom, with three members of Interpublic's board, including Krakowsky, joining Omnicom's board.
The deal is expected to result in annual cost savings of $750 million and is slated to close in the second half of the upcoming year, pending approval from both Omnicom and Interpublic shareholders. Following the announcement, Interpublic's stock surged by 10%, while Omnicom's stock experienced a decline of over 6%.
