Interpublic Group and Omnicom to Merge

The Australian Competition and Consumer Commission (ACCC) on Thursday approved the proposal of Omnicom Group to acquire the Interpublic Group of Companies Inc in a $13.64 billion in an all-stock transaction.

The transaction is expected to generate $750 million in annual cost synergies and be accretive to adjusted earnings per share for both Omnicom and Interpublic shareholders. The significant free cash flow provides greater capacity for internal investments and acquisitions.

Both companies are based in the US and listed on New York Stock Exchange. They large multinational suppliers of advertising, media and communications services, including media buying and marketing services.

In Australia, Omnicom’s key brands include DDB, TBWA, OMD Worldwide, PHD Media, Clemenger Group and Hearts & Science. Interpublic’s key brands in Australia include IPG Mediabrands, Universal McCann (UM), Initiative, 303 MullenLowe and Octagon.

The ACCC said that the proposed acquisition would be unlikely to substantially lessen competition in the supply of media buying services and marketing and communications services.

It may be recalled that the deal was cleared by the US Federal Trade Commission last month on the condition that the companies do not collude or coordinate advertising spend based on political or ideological views.

ACCC Commissioner Dr Philip Williams said. That their investigation found that while the proposed acquisition would result in an increase in the parties’ combined market share, other suppliers of media buying and marketing and communications services would continue to effectively compete with Omnicom after the acquisition.

The competition watchdog also found that the remaining advertising, media and communications conglomerates, including WPP, Publicis and Dentsu, will continue to compete with Omnicom after the acquisition, as well as smaller independent providers of these services.

Media buying services involve the planning and purchasing of advertising space from media owners across various media types, including digital platforms and more traditional media advertising, such as television, radio, print, and outdoor platforms (billboards, public transit, etc), on behalf of advertisers.

Marketing and communications services include the creation of advertising material and determining what and how advertising is communicated. Marketing and communication services include design, consumer insights, consultancy, public relations, direct marketing, event management, brand identity and customer relationship management.

Providers may offer the entire range of marketing and communication services, or they may specialise in a specific type of marketing or creative service.

Leadership & Governance

While John 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 Philippe Krakowsky, will be welcomed to the Omnicom Board of Directors.