Mixed messages from soaring Interpublic share price

Anyone who invested in Interpublic a year ago would be sitting on a more than healthy gain of 26.4 per cent as the marcoms group’s shares hit a year high of $18.82 yesterday, valuing the company at just shy of $8bn.

Now Interpublic is the subject of endless takeover speculation and such a rise would, back in the day, have indicated that someone was building a stake in the company – with a takeover in mind.

Things don’t work that way these days with the need to disclose even small shareholdings but it’s reasonable to assume that some of the share price impetus is down to investors hoping a bid is on the way. If it is those investors will be even happier as a successful bid for the company would need to be $24 a share minimum, valuing IPG at a chunky $11bn or so.

03ae85a0-35f3-4b2a-af66-006d89e28aebwallpaper1IPG boss Michael Roth (left) would say that there are good, fundamental reasons for investing in his company. He has tidied up the balance sheet and shuffled his top executives to good effect, with new bosses at McCann and FCB (formerly Draftfcb).

And IPG is winning new business at last, rather than see it going out of the door. It has a firm grip on the huge General Motors creative account and recently won Microsoft’s global creative account. It’s also making medium-sized acquisitions; Profero for Lowe & Partners back in January and this week go-go Swedish PR agency Prime for Weber Shandwick.

As the US economy slowly recovers to something like normality IPG will benefit disproportionately against its rivals as most of its business is there. So there are other reasons for buying IPG shares.

Roth still has issues to solve; chiefly his struggling Mediabrands operation outside the US where networks UM and Initiative have been steadily losing ground to the likes of WPP’s GroupM. But IPG is looking a lot stronger than it was, bid or no bid.

Still, share prices (for companies as big as IPG) usually don’t lie. With the Omnicom/Publicis merger scrapped, one incentive for WPP’s Sir Martin Sorrell to make a bid has been removed. WPP shareholders might well jib at forking out $11bn plus for more of the same.

Which leaves (among trade buyers anyway) Dentsu/Aegis and one-time suitor Publicis Groupe.

Aegis’s formidable Carat media agency network would be just the job for IPG and put all of GM into one place (assuming Carat keeps the account which must be up for some kind of review, albeit unofficial, about now).

PG flirted with IPG 18 months ago before setting out on its failed courtship of Omnicom (the bride wanted to wear the culottes). If Maurice Levy still wants a big end-of-career triumph he’d better get his skates on, judging by the upward trajectory of the IPG share price.

One Comment

  1. My money is still on the “Poisoned Dwarf” buying IPG… And since when did “His Gnomeship” listen to WPP shareholders? Funny thing is, Michael “I Know Insurance” Roth will walk with multiple millions, even after losing billions through his creation of “Agency of the Future” Draft/FCB. Same with Sorrell, who’s “Agency of the Future” – Enfatico – lost billions over its two year existence whilst never producing a single campaign for its single client. When I grow up I want to be the CEO of a BDHC.

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