Omnicom agrees deal for IPG – but game may not be over yet

So now we wait. Omnicom has agreed its deal to buy US rival IPG (Interpublic) in a deal which values the new entity at around $30bn, ahead of current market cap leader Publicis on $27bn. Combined 2023 revenues are nearly $26bn. The deal, if it goes ahead, gives IPG shareholders a premium of around 20% and 40% of the combined company. Omnicom’s John Wren will be CEO.

Worryingly for employees of both companies the two aim to achieve “annual cost synergies” of around $750m, which almost certainly means heavy job cuts in the merged entity. At the moment the two employ around 100,000 between them.

The game for the holding companies these days is media combined with performance (direct) marketing rather than creative. Omnicom has tilted heavily towards performance in recent years, notably with its $900m Flywheel acquisition. IPG boss Philippe Krakowsky, who’s staying on in the immediate future, recently bought data firm Intelligence Node, sold digital agency Huge and announced an expansion in so-called principal media (buying media and selling it on to clients – broking as was.)

Once again it looks like creative agencies are going to take the holding company hit. Omnicom has, among many others, BBDO, DDB and TBWA; Interpublic McCann, FCB and MullenLowe plus R/GA, which it’s also trying to offload.

It isn’t a done deal yet though. The two say they expect it to close in the second half of 2025 which is plenty of time for others to take a hand. A 20% premium for IPG shareholders doesn’t look unduly generous and will probably need to be improved.

Publicis, which has been bigging up its anticipated supplanting of WPP as the biggest holding company by revenue (about $14bn), won’t be best pleased to see its crown snatched. It will also be concerned at the potential creation of an American national champion for the Trump “America First” era. A majority of its business is in the US.

As for Britain’s WPP, for years the biggest holding company, it’s been well and truly left on the shelf. By comparison it’s valued at $12bn, slightly less than the rather smaller IPG in this deal. But its shares rose 6% today, suggesting that some see it playing a part in this adland restructure. Private equity companies may try to take WPP private prior to a future listing at a much enhanced valuation. Publicis may even weigh a cheeky tilt.

Update

Omnicom shareholders have given the proposed deal a markedly cool response, down 10% today.