Omnicom and The Interpublic Group of Companies Inc. have confirmed they will merge to create the world’s largest advertising agency, with a market capitalisation of almost US$30 billion ($46.9 billion).
Interpublic shareholders will receive 0.344 Omnicom shares for each Interpublic share they own, splitting ownership of the combined group between Omnicom (60.6%) and Interpublic (39.4%) shareholders.
Omnicom and Interpublic said the transaction was expected to generate annual cost synergies of $750 million.
Based on 2023 figures, the combined group would have annual revenue of $25.6 billion (57% of which was from the United States), adjusted earnings before interest, tax and amortisation (EBITA) of $3.9 billion and free cash flow of $3.3 billion.
The new Omnicom would have more than 100 practitioners providing services across media, precision marketing, CRM (customer relationship management), data, digital commerce, advertising, healthcare, public relations and branding.
Omnicom Chairman & CEO John Wren said the acquisition created significant value for shareholders by combining world-class, highly complementary data and technology platforms enabling new offerings to better serve our clients and drive growth.
“Through this combination, we are poised to accelerate innovation and harness the significant opportunities created by new technologies in this era of exponential change,” Wren said in a statement.
Interpublic CEO Philippe Krakowsky said the merger represented a tremendous strategic opportunity for stakeholders, amplifying its investments in platform capabilities and talent as part of a more expansive network .
“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,” Krakowsky said in the statement.
Wren will remain Chairman & CEO of Omnicom while Krakowsky and Daryl Simm will be Co-Presidents and Chief Operating Officers of Omnicom.
Omnicom (NYSE: OMC) shares ended US$10.60 (10.3%) down at $92.82, and capitalising the company at $18.11 billion, while Interpublic (NYSE: IPG) finished at $30.30, $1.04 (3.55%) higher, giving it a market value of $11.29 billion.