Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Omnicom and Interpublic are in talks to merge in a deal worth more than $30bn that would create the world’s largest advertising agency and reshape the global marketing industry.
The combined US group would probably overtake France’s Publicis and WPP in the UK, who have been vying for the top spot for the biggest holding company in the industry based on net revenues.
The all-stock deal is structured as a takeover of Interpublic by its larger rival Omnicom. Interpublic was worth $10.9bn at the end of trading on Friday while Omnicom was valued at $20.2bn. The combined group would have net revenue of more than $20bn.
Interpublic and Omnicom own a wide array of global advertising, marketing and PR agencies, with McCann, FCB and Mediabrands on one side and BBDO and TBWA on the other, although both agencies are US focused.
One person familiar with the situation said that talks had started in the summer. He added the deal could be announced as early as Monday. It was in effect “a takeover of Interpublic by Omnicom even if portrayed as a merger — IPG has been keen to find a buyer for some time”, he said.
Another person close to the situation also confirmed the talks on Sunday night. The proposed deal was first reported by the Wall Street Journal. Omnicom and Interpublic were not immediately available for comment.
The deal is expected to attract considerable regulatory scrutiny given the overlap in media and creative agencies, one person said.
It comes as traditional advertising agencies face mounting pressures, with most of the money in the industry now being siphoned off by large tech companies such as Google and Amazon that offer advertising tools as well as the marketplace to buy and sell digital ads.
Publicis has fared better than its rivals over the past year, having invested early in data-led services, including through the acquisitions of digital groups Sapient in 2015 and Epsilon in 2019 to bolster its technology platforms.
The industry is also facing considerable upheaval from the introduction of AI tools, which offer companies the chance to make adverts cheaper, faster and with greater targeting than ever before.
All agencies are having to invest hundreds of millions of dollars into developing AI tools to help them face the existential threat from the new technology as clients can more easily undertake their own marketing.
The deal is the largest to be proposed in the industry since the merger of Publicis and Omnicom in 2013, which also would have created the world’s biggest advertising group. However, the deal was called off after months of talks.
Read the full article here