In a pivotal move within the marketing industry, Omnicom Group announced an agreement to acquire Interpublic Group of Companies in an all-stock transaction. This strategic merger aims to forge a robust advertising entity capable of thriving in the evolving marketing landscape, as highlighted in their joint statement released on Monday. As part of the deal, shareholders of Interpublic will receive 0.344 shares of Omnicom for each share they currently possess.
The market reacted with volatility, evidenced by an 8.2% dip in Omnicom's stock during midday trading, juxtaposed with a 7.8% rise in Interpublic's shares. The acquisition is poised for completion in the latter half of next year, contingent upon regulatory approvals and the backing of shareholders from both corporations.
Post-merger, stockholders of Omnicom are set to command 60.6% of the newly formed entity, whereas Interpublic's shareholders will hold a 39.4% stake. "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," stated Omnicom's Chief Executive John Wren.
He emphasized that this merger will expedite innovation and capitalize on the plentiful opportunities presented by emerging technologies in this period of rapid change. Financial projections indicate that the deal will positively impact the adjusted earnings per share for both firms and yield annual cost synergies totaling $750 million.
As a testament to their commitment to shareholders, both companies plan to sustain their current quarterly dividends until the merger is finalized. The merged organization boasted a staggering $25.6 billion in overall revenue for 2023. The new entity will continue to operate under the Omnicom name and will be traded on the New York Stock Exchange under the OMC ticker symbol.
Leadership roles will remain stable, with Wren serving alongside Phil Angelastro, the Chief Financial Officer of Omnicom, while Interpublic's CEO Philippe Krakowsky and Daryl Simm will be appointed as co-Chief Operating Officers. Krakowsky remarked, "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." In the financial arena, Interpublic revealed that their adjusted earnings for the third quarter stood at $0.70 per share, reflecting no change from the previous year.
Revenue dipped slightly to $2.63 billion from $2.68 billion in 2022. Meanwhile, Omnicom reported a 5.7% annual increase in adjusted earnings per share to reach $2.03 for the September quarter, complemented by an 8.5% revenue growth to $3.88 billion..