Omnicom and Interpublic Merge in $13.25 Billion Deal, Reshaping Ad Industry in AI Era

Ad giant Omnicom takes aim at Big Tech, AI era with $13 billion Interpublic deal

Omnicom Group and Interpublic Group, the world's third and fourth-largest ad buyers, are merging in a $13.25 billion all-stock deal. The merger aims to create the world's largest advertising agency, better positioning them against Big Tech competition and the rise of AI. The combined company, led by Omnicom CEO John Wren, anticipates $750 million in annual cost savings.Omnicom Group has struck a $13.25 billion all-stock deal to buy rival Interpublic Group, creating the world's largest advertising agency as traditional players look to better compete with Big Tech firms amid the accelerating use of artificial intelligence (AI). The deal, announced on Monday, could attract regulatory scrutiny as it seeks to merge the world's third-largest ad buyer, Omnicom, with the fourth-largest - Interpublic. Interpublic investors will receive 0.344 Omnicom shares for each share held, or $35.58 based on Omnicom's last close. This represents a premium of 21.6% to Interpublic's close on Friday. Interpublic's shares, down more than 10% this year, were up nearly 11% in early trading. Omnicom fell 6%. "We are pretty confident this is not going to create any regulatory issues. The world isn't divided into four companies - you have things like Google, Facebook, Amazon... servicing people's marketing needs," Omnicom CEO John Wren said on a call with analysts. "Also, there's reason to believe that the change in administration (in the US) will make it more friendly to business." Regulatory roadblocks had forced Omnicom and France's Publicis Groupe SA to call off their $35 billion merger in 2013. Omnicom owns brands such as BBDO and TBWA, while Interpublic owns McCann, Weber Shandwick and Mediabrands. Both companies are based in New York. The combined company would have revenue of more than $25 billion, based on 2023 figures. It would compete with the UK's WPP and Publicis, which generated annual revenue of 14.85 billion pounds ($18.97 billion) and 13.10 billion euros ($13.86 billion), respectively. Wren will lead the new company, while Interpublic boss Philippe Krakowsky will serve as co-chief operating officer along with Daryl Simm. Competition for ad dollars Tech giants such as Alphabet-owned Google and Amazon. com have in recent years attracted marketing dollars away from traditional agencies by offering both advertising tools and marketplaces to buy and sell them. Soaring use of AI tools that allow businesses to create ads cheaper and faster has squeezed traditional agencies, forcing them to scramble to develop similar in-house tools to retain clients. "This move allows us to take control of our own future rather than wait for technology to impact it in ways that you can't anticipate today," Wren said. Apple, Chanel, Disney and Volkswagen are among Omnicom's customers, while Interpublic's client roster includes Johnson & Johnson, Levi Strauss, and Barbie maker Mattel. "An integration of this size would be unprecedented and likely challenging," said MoffettNathanson analyst Michael Nathanson. Omnicom shareholders will own 60.6% of the combined company. The deal is expected to close in the second half of 2025 and generate annual cost savings of $750 million.

Interpublic shares jump after WSJ reports Omnicom is set to buy peer By Investing.com

Investing.com -- Omnicom Group Inc (NYSE:OMC) is reportedly in advanced discussions to acquire Interpublic Group (NYSE:IPG) in an all-stock transaction valued between $13 billion and $14 billion, excluding debt, according to a report from the Wall Street Journal on Sunday. The proposed merger would combine the world's third-largest ad buyer, Omnicom, with the fourth-largest, Interpublic, and is likely to draw regulatory scrutiny. Interpublic, which owns brands like McCann, Weber Shandwick, and Mediabrands, had a market capitalization of approximately $10.9 billion as of Friday. Omnicom, valued at $20.2 billion, counts BBDO and TBWA among its prominent brands. While exact terms of the deal remain undisclosed, the Journal noted that an announcement could come as early as this week. Interpublic shares soared more than 13% in premarket trading Monday, while Omnicom's slid over 2%. If finalized, the merger would unite some of the most recognized names in advertising under one entity, furthering the decades-long trend of consolidation within the industry. A few large conglomerates already dominate Madison Avenue, shaping much of the advertising seen across television, online platforms, and physical billboards. Beyond creating ads, these companies also manage ad placements, loyalty programs, shopper data analysis, influencer marketing, and crisis communication strategies. The deal would represent the largest deal in the advertising sector's history. Omnicom previously attempted a $35 billion merger with Publicis Groupe (EPA:PUBP) in 2014, but the deal fell apart amid disagreements over leadership roles and control within the combined company. The consolidation could strengthen Omnicom and Interpublic as they face a rapidly evolving advertising landscape increasingly influenced by technology, data analytics, and AI. Traditional ad firms are under growing pressure from tech giants like Google (NASDAQ:GOOGL) and Meta (NASDAQ:META), which are leveraging AI to expand their presence in the advertising market. Generative AI is reshaping the advertising industry, posing challenges to traditional agency payment models and potentially reducing the need for roles such as copywriters, graphic designers, and ad buyers who manage audience targeting. Interpublic and WPP (LON:WPP) have faced difficulties keeping up with Publicis, which has been quicker to adapt to these technological changes. The Paris-based company has invested heavily in acquiring data and e-commerce firms and has focused on digital transformation advisory services. These moves aim to strengthen its position against consulting firms that are increasingly competing in the advertising and marketing space.