Omnicom’s proposed takeover of rival Interpublic would create the world’s largest advertising agency if it wins regulatory approval.
The agreement, announced Dec. 9, provides that Interpublic shareholders will receive 0.344 shares of Omnicom stock for each share of Interpublic common stock they own.
Omnicom shareholders will own 60.6% of the potentially combined company, and the deal is projected to result in significant cost savings of $750 million.
John Wren, who will remain chairman and CEO of Omnicom, expects the deal to combine complementary data and technology platforms.
The merger is also intended to become more competitive with new technologies such as artificial intelligence, as both parties believe the agreement will allow them to offer an exceptional range of services to customers.
However, further talks are planned on how the companies will operate once they receive regulatory approval.
Omnicom entered the deal in good shape, posting strong third-quarter results this year with organic revenue growth of 6.5% and net income of $385.9 million.
While a Morgan Stanley analyst note said New York-based Interpublic’s earnings are expected to decline in 2025.
The deal could be a game changer for the industry as the combined company will eclipse Publicis and WPP as the world’s largest holding companies.
Additionally, the completion of the merger could also lead to a changing of the guard in terms of the regional balance of power from Europe to the United States.
Of course, the sheer size of the deal may create barriers to obtaining the necessary regulatory approvals.
In 2013, Omnicom, also based in New York, planned to acquire Publicis. The idea was abandoned a year later due to the slow pace of completion of the deal as the scrutiny became too much to overcome.
This second merger attempt initially caused many to question its merits, with analysts citing concerns about competition and that the agreement would create conflicts of interest between the companies’ clients. Whether regulators under President-elect Donald Trump’s administration will ignore these concerns remains to be seen.