Omnicom’s proposed deal to buy rival Interpublic is expected to create the world’s largest advertising agency if it wins regulatory approval.
The deal, announced Dec. 9, would see Interpublic shareholders receive 0.344 shares of Omnicom for each share of Interpublic common stock they own.
Omnicom shareholders will own 60.6% of the potentially combined entity, and the transaction is expected to generate substantial savings of $750 million.
John Wren, who will remain Omnicom’s chairman and CEO, expects the deal to pool complementary data and technology platforms.
The merger also aims to be more competitive with new technologies such as artificial intelligence, with both parties believing the deal would allow them to offer an exceptional range of services to customers.
However, further discussions are expected on how the companies will operate after any regulatory approval.
Omnicom closed the deal in good shape, having reported strong results for the third quarter of this year with organic revenue growth of 6.5%, with net income of $385.9 million.
While an analyst note from Morgan Stanley revealed that New York-based Interpublic is expected to see a decline in revenue in 2025.
It’s a deal that could change the industry landscape, as the combined company would eclipse Publicis and WPP as the world’s largest holding companies.
Furthermore, the completion of the merger could also result in a changing of the guard, in terms of the regional balance of power, from Europe to the United States.
Of course, the sheer scale of the deal may create obstacles to obtaining the necessary regulatory approval.
In 2013, Omnicom, also based in New York, considered buying Publicis. The idea was abandoned a year later due to the slow pace of closing the deal as the scrutiny became too much to overcome.
Initially, this second merger attempt raised doubts about its merits, with analysts pointing to competition concerns and how the deal would lead to conflicts of interest between the companies’ customers. It remains to be seen whether regulators under President-elect Donald Trump’s administration will overlook these challenges.