Are WPP and Dentsu preparing for a tussle over IPG?

In the blue corner we have WPP’s Sir Martin Sorrell and in the red corner my friend George Parker of Adscam fame. And this particular fight (they’ve had the odd tussle over the years)?

Who, if anyone, is going to try to buy Interpublic (IPG).

imagesGeorge reckons it’s going to be SMS (left) (because that’s what SMS does) and SMS reckons it’s going to be Dentsu/Aegis. Others say that Publicis Groupe, which has broken off its engagement to Omnicom, the indirect cause of much of the IPG speculation, will have another go at buying – or merging with – IPG.

PG is believed to have made an unofficial approach to IPG boss Michael Roth in late 2012 but jibbed at the price IPG wanted – $19 or so a share a share against $15. IPG shares are currently trading at just shy of $18 so a bidder might now have to pay $25 or more.

But why would IPG want to sell, assuming it had the choice? Roth can congtratulate himself on a job well done with his various ad agencies. McCann, by far the biggest in the group, has steadied following the appointment of former PR boss Harris Diamond as CEO after the turbulent Nick Brien era. McCann recently won the bulk of Microsoft’s creative and seems firmly installed as General Motors’ lead agency via its ownership of the Commonwealth structure (originally a partnership with Omnicom).

Unknown-7Draftfcb, now renamed Foote Cone & Belding (alternatively FCB) after one of its roots, was in danger of becoming a complete basket case after the losses of SC Johnson and MillerCoors. But new boss Carter Murray (left) has, like Diamond at McCann, steadied the ship and even started win some business, including Levi’s in the US. FCB now no longer has an international network to speak of but it’s worth remembering that its Chicago office was, until recently, the biggest single agency in the US.

The problems for IPG lie outside the US, particularly in media. The company has two main media networks – UM (formerly Universal Media) and Initiative. UM lost Microsoft’s media business to Aegis in the recent pitch, which makes its international media offering look decidedly below par. And scale is everything in media these days, as WPP’s GroupM regularly demonstrates.

The only two credible challengers to GroupM are Omnicom’s OMD and Aegis with its Carat network. Omnicom is hardly likely to go after IPG – it would make it far too big for regulators’ tastes in the US and Omnicom CEO John Wren will be wary of more adventures following the Publicis fiasco.

But Dentsu/Aegis might. Dentsu’s acquisition of Aegis appears to be a big success but the new entity lacks a credible creative presence outside Japan. Mcgarrybowen is its creative flagship but is never going to be the size of a McCann or BBDO.

A combined IPG and Dentsu/Aegis would have all the firepower it needs and – crucially – two massive (currently shared) accounts: GM and Microsoft.

One of the attractions of IPG to US clients, who still tend to call the shots worldwide, is precisely that: it’s American. So selling to a Japanese company would have dangers. PG boss Maurice Levy, who had seen his GM Cadillac business go to IPG’s Lowe and Partners, surely recognised that ‘born in the USA’ appeal when he suggested the merger with Omnicom.

None of this might happen of course but you can bet that some people are working out how a deal might work – even if they’re only M&A bankers in search of another payday.

Update

Adweek thinks that spurned suitor Publicis Groupe might attempt a takeover of Omnicom. Pigs might fly? But that’s what we all thought last summer before the Omnicom/Publicis ‘deal’ was announced.

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.