Interpublic stocks jump on report Omnicom has advanced discussions to buy Ad Rival

TAKEAWAYS KEY

• Interpublic Group of Companies shares are surging in premarket trading on a report that Omnicom Group is in advanced talks to acquire its rival in an all-stock deal that would form the world's largest advertising company.
• The Wall Street Journal reported that the deal may be announced this week. It would put Interpublic’s value between $13 and $14 billion including debt.
• Citi analysts said a deal, if attempted, would be "apt to be approved" by regulators.

Interpublic Group of Companies shares (IPG), which are traded in the premarket, have surged 14% on reports that Omnicom Group is in advanced negotiations to buy its competitor in a stock-only deal. This would create the largest advertising group in history.

The Wall Street Journal reports that the deal may be announced this week. It would put Interpublic’s value between $13 and $14 billion (excluding debt). Interpublic’s shares have dropped around 10% this year and ended Friday trading at $29.26. This gives the company a value of about $11 billion.

Based on figures for 2023, the combined company’s annual net income would be more than 25 billion dollars. WPP (WPP), the current largest advertising agency, is expected to generate net revenues of approximately $15 billion in 2023.

Omnicom shares have fallen 5% during premarket trading, after gaining almost 20% in the past year.

Citi Says Deal 'Apt To Be Approved'

Citi reported Monday that investors could expect a regulatory hurdle for the transaction, as the combined firm controls 48% the U.S. marketplace. However, smaller agencies and tech companies, along with consulting firms are also competing in this market.

"While regulatory questions will certainly be raised, we believe this transaction is apt to be approved (if it is attempted)," the Citi analysts wrote, noting that "mergers among large agency holding companies are rare." 

Omnicom and Interpublic Group didn't immediately return Investopedia requests for comment.

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