The market, as I said last week, is awash with rumours that Publicis Groupe is about to pounce on poor old Interpublic Group.
No, really – seriously awash. So much so that IPG stock had jumped more than ten per cent to $10.87 (when I last looked) on speculation that PG is considering a $15-a-share paper-and-cash knock-out deal which would value IPG at $6bn. Rothschild is said to be working feverishly behind the scenes with other banks.
And IPG, what is it saying? “It is our policy not to comment on market rumors or speculation.” So, that might be a yes then. Publicis Groupe? Impenetrable silence. The rumour has got the investment community hooked, that’s for sure: “We think the reports are credible,” Pivotal Research Group analyst Brian Wieser tells us in a research note.
But how credible? Sure, from a financial engineering point of view it looks plausible. It would catapult Publicis Groupe to second largest marketing services group by revenue, behind WPP – creating a spectacular rejoinder to Dentsu’s stunning $5bn takeover bid for Aegis. And mean that PG supremo Maurice Lévy (above) could exit the stage after a high ‘C’ that cracks all the chandeliers.
Client conflicts? Not as bad as they might seem at first sight – given the size of these two behemoths. For example, they share L’Oréal and Nestlé; they have shared General Motors. On the other hand, I wouldn’t have minded being a fly on the wall when Paul Polman, CEO of Unilever, and Bob McDonald, CEO of Procter & Gamble, first heard the rumour. It’s not just a question of client conflict – the two rivals reputedly personally loathe each other.
But deals are on the table all over the place, whatever clients think. It’s also emerged that Havas, now seen as a target for either Omnicom or IPG, has taken a five per cent share in UK mini-marcoms group Creston.
But here’s my real question. Who is going to run the new show? A sophisticated French adman who is too old and keeps telling us he is about to retire? Or a US former corporate lawyer (step forward Michael Roth) whose track record in running a publicly quoted marketing services company is at best indifferent? Would anyone except a Frenchman be allowed to run such a company, given that Publicis Groupe is such a national treasure? And if a Frenchman, who has the stature?
Over two years ago I flagged up the possibility of just such a merger. Then, like now, IPG’s share price was depressed and the moment seemed opportune. At that time PG had recently acquired an expensive M&A expert from Goldman Sachs called Isabelle Simon, whose skills seemed exactly matched to crafting just such a financial operation. And the PG succession crisis seemed a lot less pressing than it is today.
Simon clearly got fed up waiting. Last year she defected to a Monaco gambling organisation.