Omnicom has announced its acquisition of Interpublic Group in a stock-for-stock transaction that will establish the largest advertising agency globally, boasting nearly $26 billion in combined annual revenue.
Although the company names might not resonate with many Americans, their marketing campaigns are well-known. Iconic campaigns such as “Got Milk” for the California Milk Processor Board, “Priceless” for Mastercard, “Because I’m Worth It” for L’Oreal, and “Think Different” for Apple are just a few examples of their impactful work.
The newly formed entity will have a market valuation exceeding $30 billion.
John Wren, Chairman and CEO of Omnicom, stated, “This merger positions us to enhance innovation and leverage the significant opportunities arising from new technologies in this rapidly changing environment. It’s an ideal moment for us to unite our technologies, competencies, talent, and geographical presence to deliver exceptional, data-driven results for our clients.”
The company will retain the Omnicom branding and operate under the ticker symbol “OMC” on the New York Stock Exchange.
The scale and capabilities of this new marketing powerhouse promise numerous benefits, including the integration of advanced technologies like artificial intelligence.
According to JPMorgan analyst David Karnovsky, “We believe both companies have roughly equal contributions from advertising and marketing services, providing a strong foothold not just in creative and media, but also in specialized sectors like healthcare, experiential marketing, and public relations.” He further noted that “Consolidation in the industry is beneficial, particularly after a period of varied growth among agencies and in anticipation of a significant investment phase for Generative AI.”
As part of the agreement, shareholders of The Interpublic Group of Companies Inc. will exchange each share of Interpublic common stock they hold for 0.344 shares of Omnicom. Post-transaction, Omnicom shareholders will hold a 60.6% stake in the new entity, while Interpublic shareholders will possess 39.4%.
Wren will continue as the chairman and CEO of Omnicom, with Phil Angelastro staying on as executive vice president and chief financial officer. Interpublic’s CEO Philippe Krakowsky, along with Daryl Simm, will assume roles as co-presidents and chief operating officers.
Three current members of Interpublic’s board, including Krakowsky, will join the Omnicom board following the merger.
Expected to yield $750 million in annual cost savings, the deal is projected to conclude in the latter half of next year, pending approval from both Omnicom and Interpublic shareholders.
Following the announcement, Interpublic shares experienced a 10% increase, while Omnicom’s stock dropped by more than 6%.
