Omnicom’s proposed deal to acquire rival Interpublic is set to create the world’s largest advertising agency if it receives regulatory approval.
Under the agreement, announced Dec. 9, Interpublic shareholders will receive 0.344 shares of Omnicom for every share of Interpublic common stock they own.
Omnicom shareholders will own 60.6% of the potentially combined entity, and the deal is expected to deliver significant cost savings of $750 million.
John Ren, who will remain chairman and CEO of Omnicom, expects the deal to bring together complementary data and technology platforms.
The merger also looks to be more competitive with new technologies such as artificial intelligence, as both parties believe the agreement will allow them to offer an exceptional range of services to clients.
However, talks on how the companies will operate are set to continue after any regulatory approval.
Omnicom entered the deal in good shape, having delivered strong results for the third quarter of this year with organic revenue growth of 6.5%, with net income of $385.9 million.
While an analyst note from Morgan Stanley revealed that New York-based Interpublic is expected to see a decline in revenue in 2025.
It’s a deal that could change the landscape of the industry, as the combined company would overtake Publicis and WPP as the world’s largest holding companies.
Completing the merger could also lead to a changing of the guard, in terms of the regional balance of power from Europe to the United States.
Of course, the sheer size of the deal may create barriers to obtaining the necessary regulatory approval.
In 2013, Omnicom, also based in New York, planned to buy Publicis. The idea was scrapped a year later due to the slow pace of completing the deal, as scrutiny became too great to overcome.
Initially, this second merger attempt caused many to question its merits, with analysts citing competition concerns and how the agreement might create conflicts of interest between the companies’ clients. It remains to be seen whether regulators under the administration of President-elect Donald Trump will ignore these challenges.
