A US$31b ad deal shows the Mad Men are scared

BIG deals are risky in most industries but especially in advertising – that’s why it’s so rare to see the so-called Mad Men give them a go. But the antitrust environment is easing, and the traditional marketing business is under pressure. Hence, Omnicom Group is buying the Interpublic Group of Companies to create a new world No 1 in advertising. See it as one of the most obvious reactions to more benign conditions for dealmaking expected under a Donald Trump presidency.

On a narrow view, Omnicom is opportunistically swooping in on an underperforming peer. In late 2021, the firms had roughly the same stock market value. Since then, Omnicom has been a roll while Interpublic has found it harder to attract and retain clients. At US$20 billion, Omnicom’s market capitalisation was nearly twice Interpublic’s before the Wall Street Journal reported takeover talks this past weekend, enabling it to pursue a deal from a position of strength.

The all-stock terms offer Interpublic investors a premium exceeding 20 per cent, valuing their company at US$13 billion based on Omnicom’s closing price on Friday (Dec 6). Omnicom chairman and chief executive officer John Wren retains his position, as does his chief financial officer.