Omnicom announced Monday it will acquire rival Interpublic Group (IPG) in a $13.25 billion stock-for-stock transaction that will create the world’s largest advertising conglomerate with a combined annual revenue of almost $26 billion.
Per Reuters, the buyout comes as traditional players look to better compete with Big Tech firms amid accelerating use of AI. Additionally, the deal is expected to attract regulatory scrutiny as it seeks to merge the world’s third-largest ad buyer, Omnicom, with the fourth-largest – IPG. Both companies are based in New York.
Under the terms of the agreement, IPG shareholders will receive 0.344 Omnicom shares for each share of Interpublic common stock they own. Following the close of the transaction, Omnicom shareholders will own 60.6% of the combined company and IPG shareholders will own 39.4%, on a fully diluted basis. The transaction is expected to generate annual cost synergies of $750 million.
The new Omnicom will have over 100,000 expert practitioners. The company will deliver end-to-end services across media, precision marketing, CRM, data, digital commerce, advertising, healthcare, public relations and branding.
“This strategic acquisition creates significant value for both sets of shareholders by combining world-class, highly complementary data and technology platforms enabling new offerings to better serve our clients and drive growth,” said John Wren, chairman & CEO of Omnicom. “Through this combination, we are poised to accelerate innovation and harness the significant opportunities created by new technologies in this era of exponential change. Now is the perfect time to bring together our technologies, capabilities, talent and geographic footprints to bring clients superior, data-driven outcomes. We are excited to welcome Philippe and the entire Interpublic team to the Omnicom family.”
“This combination represents a tremendous strategic opportunity for our stakeholders, amplifying our investments in platform capabilities and talent as part of a more expansive network,” said Philippe Krakowsky, IPG’s CEO. “Our two companies have highly complementary offerings, geographic presence and cultures. We also share a foundational belief in the power of ideas, enabled by technology and data. By joining Omnicom, we are creating a uniquely comprehensive portfolio of services that will make us the most powerful marketing and sales partner in a world that’s changing at speed. We look forward to working with John and the entire Omnicom team.”
Transaction Highlights
Highly complementary assets create an unmatched portfolio of services
and products that expands client opportunities for each company on day one
Omnicom and IPG share highly complementary cultures and core values including a foundational belief in the power of ideas enabled by technology and data
Creates an industry leading identity solution with the most comprehensive understanding of consumer behaviors and transactions, enabling us to deliver superior outcomes for our clients at scale and speed
Advances our ability to continually innovate and develop new products and services, providing higher ROI on marketing spend
Significant free cash flow provides greater capacity for internal investments and acquisitions
Leadership & Governance
Wren will remain chairman & CEO of Omnicom. Phil Angelastro will remain EVP & CFO of Omnicom. Philippe Krakowsky and Daryl Simm will serve as co-presidents and COOs of Omnicom. Krakowsky will also be co-chair of the Integration Committee post-merger. Three current members of the Interpublic board of directors, including Krakowsky, will be inducted into the Omnicom Board of Directors.
Transaction Details and Financial Profile
The transaction is expected to generate $750 million in annual cost synergies and be accretive to adjusted earnings per share for both Omnicom and IPG shareholders. Omnicom will have an attractive pro forma financial profile:
Combined 2023 revenue of $25.6 billion, Adjusted EBITA of $3.9 billion and free cash flow of $3.3 billion
Combined 2023 revenue of 57% U.S. and 43% International
Strong balance sheet, commitment to investment grade rating with combined debt to EBITDA ratio of 2.1x before the benefit of synergies[2]
Omnicom will continue its practice for use of free cash flow: dividends, acquisitions and share repurchases
Both Omnicom and IPG will maintain their current quarterly dividend through the closing of the transaction
The stock-for-stock transaction is expected to be tax-free to both Omnicom and IPG shareholders and is expected to close in the second half of 2025, subject to Omnicom and IPG shareholder approvals, required regulatory approvals, and other customary conditions.
The combined company will retain the Omnicom name and trade under the OMC ticker symbol on the New York Stock Exchange.
