WPP’s status as the world’s biggest advertising agency is under threat after the two US rivals agreed to a mega-billion pound merger.
New York-based Omnicom and Interpublic, the second and fourth biggest media agencies, have hit £10 billion to join forces in a move that could dethrone the FTSE 100 WPP member.
The tie-up is likely to spark fears of job losses in the UK as both entities employ thousands of people across their advertising and PR businesses across Britain, and to save £585 million in costs through consolidation.
Globally, Omnicom employs more than 75,000 people while Interpublic employs more than 57,000.
Under the terms of the deal, Interpublic shareholders will receive 0.344 Omnicom shares for each share held in the business, giving them control of 39.4 percent of the enlarged group.
Tie-up: Omnicom, led by CEO John Wren (left) and Interpublic, led by CEO Maurice Levy (right), the second and fourth largest advertising agencies, have reached £ 10 billion for joining forces.
Omnicom CEO John Wren said: ‘Now is the perfect time to combine our technology, capabilities, talent and geographic footprint to deliver customers better results, powered by data.’
It is expected to receive strong communication from competition organizers due to the industry’s strong presence in the sector.
If completed, it means WPP will win ad sales for the first time in 16 years.
The London-based firm is dwarfed by its rivals in terms of sales and market capitalization, with Omnicom worth £15.8billion and Interpublic worth £8.5billion to WPP’s £9.4billion.
Combined, the two US firms reported profits of around £20bn last year compared to £14.8bn for WPP.
The global ‘Big Four’ advertising agencies will also be reduced to three, with WPP competing with the newly merged agency and French giant Publicis Group, which owns advertising agency Saatchi & Saatchi.
WPP shares have struggled since the departure of its founder and long-serving boss Sir Martin Sorrell in 2018.
But the shares rose 2.8 per cent, or 24p, to 891.6p yesterday as investors wondered whether the merger could be an opportunity for the group.
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