Agency-holding-company shares went on a ride Monday in the first day of trading following the weekend announcement that Omnicom Group and Publicis Groupe would merge to form the world's largest ad company.
The tie-up is widely expected to set off a wave of consolidation in the industry as others join the chase for scale in order to compete with the proposed behemoth, which had combined revenue of $23 billion in 2012.
As a result, the big winners on Wall Street Monday were Interpublic Group of Cos., Havas and MDC Partners, which are viewed as the most attractive acquisition targets. IPG's shares rose as much as 9.8% during the day, reaching a 52-week high of $17.43, before closing at $16.61, a 4.7% increase on the day. Havas also hit a 52-week high during the day and closed up 4.6% at 5.66 euros. MDC shares closed at an all-time high, rising 4% to $24.
After spending Sunday digesting the deal, investors sent shares of both Publicis and Omnicom up sharply in early trading, but by end of day seemed to offer a collective "so what?" Publicis shares finished essentially flat at 59.40 euros after jumping as much as 6.6%. Omnicom stock ticked down 0.6% to $64.75 after rising as much as 8.3%.
Publicis CEO Maurice Levy and Omnicom CEO John Wren, who will be co-CEOs of the merged company, have already started making their pitch to investors, holding three press conferences between Sunday and Monday to explain the deal's merits.
The one company that didn't have a wild day of trading was WPP, currently the largest agency company. The firm, led by Martin Sorrell, isn't expected to sit still while its two closest rivals join forces and is considered the most likely to search for acquisitions.