Omnicom Stock Down After $13 billion Acquisition Announcement To Buy Interpublic: Retail’s Extremely Bullish

Shares of Omnicom Group ($OMC) fell more than 9% on Monday afternoon after the advertising company announced the acquisition of Interpublic Group of Companies ($IPG), lifting retail sentiment.

Under the stock-for-stock deal, valued at $13 billion, Interpublic shareholders are set to receive 0.344 Omnicom shares for each share of Interpublic common stock they own.

Omnicom shareholders will own 60.6% of the combined company, while Interpublic shareholders will own 39.4% on a fully diluted basis. The companies said in a statement that the deal is expected to generate annual cost synergies of $750 million.

The statement added that both Omnicom and Interpublic will maintain their current quarterly dividends through the deal's closing.

Retail sentiment on the two stocks turned ‘extremely bullish’ but some users were concerned about regulatory blocks that may hinder the deal.

Omnicom Group sentiment meter and message volumes on Dec 9.

 

Interpublic sentiment meter and message volumes on Dec 9

 

“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,” John Wren, Omnicom’s chairman & CEO, said in a statement.

Philippe Krakowsky, Interpublic’s CEO, added the two companies have “highly complementary offerings, geographic presence and cultures.”

“This combination represents a tremendous strategic opportunity for our stakeholders amplifying our investments in platform capabilities and talent as part of a more expansive network,” he said.

Interpublic shares were down slightly (0.88%) in afternoon trade on Monday after rising earlier in the day.

The combined companies will have 2023 revenues of $25.6 billion, adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $3.9 billion, and free cash flow of $3.3 billion.

PJT Partners is the financial advisor to Omnicom; Latham & Watkins is the legal advisor to Omnicom; Morgan Stanley is the financial advisor to Interpublic on the transaction.

Omnicom stock is up 6% year-to-date.
 

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