Most people in adland have been rather mystified by Interpublic’s decision to merge US agency Mullen with global network Lowe – as Mullen Lowe which says clearly enough who’s in the driving seat.
Lowe has struggled to build its one-time UK fame into a global property but, recently under CEO Michael Wall, it’s seemed to be making progress. It’s done well in Latin America and also Spain and Portugal.
Mullen, on the other hand, isn’t an international name. And it’s not a particularly appealing name either.
So what’s IPG up to?
IPG has done a good job of boosting biggest network McCann recently (most notably with General Motors) and has brought Draft/FCB back from the grave with its rebranding as FCB, under go-go CEO Carter Murray.
But its media operation, Mediabrands, is in a right old mess, losing its biggest accounts outside the US – Microsoft and Tesco, to Carat and MediaCom respectively – and facing a review of its whopper L’Oreal account in the US.
In the meantime it has one Elliott Management, owner of a 6.9 per cent stake, stirring things up and succeeding in having three new directors placed on the IPG board. Which seems pretty excessive for a 6.9 per cent stake.
When Elliott bought into IPG about 18 months ago it looked as though it was trying to engineer a takeover, from WPP, Dentsu Aegis or Publicis Groupe. WPP’s Sir Martin Sorrell has said, consistently, that he’s not interested (although he has been known to change his mind), Dentsu has demurred although it’s still light on creative agencies and Publicis boss Maurice Levy, who came close to a bid for IPG two years ago, has since splashed the cash on $3.7bn Sapient, owner of Sapient Nitro.
So what’s Elliott, and seemingly obedient CEO Michael Roth, to do?
Apparently the plan is to force up IPG’s share price up from its current $20 (it’s risen strongly in the past year) to around $27, which would deliver a stonking great profit for Elliott. And a considerable boost to Roth’s shareholding. IPG then would be worth around $11bn, from its current $8.6bn. WPP is worth about $30bn.
But this will require a degree of painful surgery, ‘tidying up the balance sheet’ as they euphemistically call it. The forced marriage of Mullen and Lowe looks like the first big stage in this process. Media – IPG owns UM and Initiative and a third network called BPN (which hardly seems necessary) – is another obvious target for ‘rationalisation.’
So life in an IPG agency or other company might not be a very comfortable place to be for while, until that share price moves upwards.
Interpublic was the first all-embracing marcoms company with the world as its oyster back in the Sixties under Marion Harper. Strange days indeed..