Top executives from Omnicom Group and Interpublic Group made a case Monday for a proposed merger of ad-industry giants that would create a company that exceeds the size of two main rivals and is better equipped to handle some of the big challenges facing the industry in the not-too-distant future.
In era when creating content that gets passed along to consumers in viral fashion is easier than ever, said John Wren, Omnicom’s CEO, “every company in our business needs to make investments to stay at the cutting edge of that.”
Omnicom and Interpublic have proposed an all-stock transaction that they say will generate cost synergies of $750 million within two years of the close of a deal, which could be consummated in 2025. At close, Omnicom shareholders will own 60.6% of the combined company and Interpublic shareholders will own 39.4%. Wren will remain chairman and CEO of Omnicom, while Interpublic CEO Philippe Kraskowsky will serve as a co-president and co-COO of Omnicom, along with Daryl Simm. Three current members of the Interpublic Board of Directors, including Kraskowsky, will join the Omnicom board.
The combined company is expected to be larger than the other two big rivals in the sector, France’s Publicis Groupe and WPP of the U.K. Interpublic has built up an expertise in ad-tech and using data to help guide placement of ads that Omnicom could utilize, while Omnicom has Omnicom longstanding relationships with blue-chip marketers such as PepsiCo and Apple, and houses units such as BBDO, TBWA Worldwide and Omnicom Media Group. While it has only infrequently been seen as blazing new frontiers in digital practices, it closed a deal in January to buy Flywheel, a specialist in digital commerce.
“What attracted me to this transaction” wasn’t cost synergies, said Wren, but the “revenue possibilities” that might come thanks to new skills and capabilities, as well as an ability to invest for the future.
“The impetus on our side was always strategic,” said Krakowsky. “The idea was where’s the industry moving to, how can we drive growth, how can we bring clients a portfolio” that’s most impressive and has meaningful benefits.
More to come…
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