The payouts on the company's previous acquisitions take the form of "earn-outs," so dubbed as to reflect Omnicom's strategy to pay for acquisitions partly upfront and partly in future years based on the acquired company's performance.
Omnicom estimates it will need to pay out $394.1 million over time, with $376.5 million due through 2005, assuming acquired agencies continue to perform at current levels. The payout is above Omnicom's earlier guidance; the company last month estimated that as of June 1 it owed $250 million to $350 million in earn-outs through 2005.
In an "investor presentation" released today on its Web site, Omnicom said it has used earn-outs over the past several years for about three-fourths of its acquisitions; it typically pays 30% to 70% of
Omnicom also said it's agreed to acquire an additional equity stake in unspecified subsidiary and affiliate agencies for a total current and future obligation of $163 million.
Omnicom reported more detail on how it last year spent a previously disclosed $844.7 million on acquisitions. About half the money -- $433.1 million -- went for new acquisitions. Earn-outs for previous acquisitions accounted for $203.7 million. Of the remaining spending, most of the money -- $182.6 million -- went to acquire additional stakes in agencies in which Omnicom already owned a majority stake.
The disclosures came about a month after Omnicom management vowed to release more information about acquisitions and other financial matters after questions were raised in press coverage about issues including Omnicom's accounting for acquisitions.
Omnicom today closed at $47.56, up $2.78 though less than half of the 52-week peak hit in early March.