Investing.com -- Omnicom Group Inc (NYSE:OMC) is reportedly in advanced discussions to acquire Interpublic Group (NYSE:IPG) in an all-stock transaction valued between $13 billion and $14 billion, excluding debt, according to a report from the Wall Street Journal on Sunday.
The proposed merger would combine the world’s third-largest ad buyer, Omnicom, with the fourth-largest, Interpublic, and is likely to draw regulatory scrutiny. Interpublic, which owns brands like McCann, Weber Shandwick, and Mediabrands, had a market capitalization of approximately $10.9 billion as of Friday. Omnicom, valued at $20.2 billion, counts BBDO and TBWA among its prominent brands.
While exact terms of the deal remain undisclosed, the Journal noted that an announcement could come as early as this week.
Interpublic shares soared more than 13% in premarket trading Monday, while Omnicom's slid over 2%.
If finalized, the merger would unite some of the most recognized names in advertising under one entity, furthering the decades-long trend of consolidation within the industry. A few large conglomerates already dominate Madison Avenue, shaping much of the advertising seen across television, online platforms, and physical billboards.
Beyond creating ads, these companies also manage ad placements, loyalty programs, shopper data analysis, influencer marketing, and crisis communication strategies.
The deal would represent the largest deal in the advertising sector’s history. Omnicom previously attempted a $35 billion merger with Publicis Groupe (EPA:PUBP) in 2014, but the deal fell apart amid disagreements over leadership roles and control within the combined company.
The consolidation could strengthen Omnicom and Interpublic as they face a rapidly evolving advertising landscape increasingly influenced by technology, data analytics, and AI.
Traditional ad firms are under growing pressure from tech giants like Google (NASDAQ:GOOGL) and Meta (NASDAQ:META), which are leveraging AI to expand their presence in the advertising market.
Generative AI is reshaping the advertising industry, posing challenges to traditional agency payment models and potentially reducing the need for roles such as copywriters, graphic designers, and ad buyers who manage audience targeting.
Interpublic and WPP (LON:WPP) have faced difficulties keeping up with Publicis, which has been quicker to adapt to these technological changes.
The Paris-based company has invested heavily in acquiring data and e-commerce firms and has focused on digital transformation advisory services. These moves aim to strengthen its position against consulting firms that are increasingly competing in the advertising and marketing space.