Something seems to be going on Interpublic, the world’s fourth-largest marcoms group, with traders closing short positions (the expectation that the share price will fall) and betting on further rises.
The shares are currently trading at just above $20 (IPG hit a 12-year high of $21 late last year), valuing the company at around $8.2bn. As this reflect a price/earnings ratio of 22, it’s unlikely that the interest in the stock is prompted solely by expectations of better trading although IPG’s big creative agencies (McCann and FCB seem to have stabilised and even MediaBrands is doing a little better with Initiative recently winning GoDaddy in the US.
Last year US ‘active investor’ Elliott Management bought a 6.7 per cent stake in IPG to try to nudge, well shove, CEO Michael Roth into a deal. The question for Elliott and others is – with whom exactly?
WPP has said it isn’t interested, one-time suitor Maurice Levy of Publicis Groupe is spending $3.7bn on Sapient and Dentsu Aegis, which looks the best fit with IPG, has also said it isn’t in the market. Such views change, of course.
These days, though, it’s not just other marcoms companies buying in the sector. Private equity houses are looking at agencies, seemingly in the hope that there’ll be more convergence between the world of advertising and those of technology and entertainment. Silver Lake-funded William Morris Entertainment has bought a stake in Droga5 while Lake Capital has bought the UK’s Engine Group.
The Chinese are buying too: PR giant BlueFocus, which owns the UK’s We Are Social, recently bought the Cossette ad agency network in North America. $8.2bn (plus premium, of course) wouldn’t be that big a mouthful for a well-funded Chinese buyer looking to acquire some of the marcoms world’s best-known brands. IPG owns big PR company Weber Shandwick as well as a large number of agencies.