M&A in Adland: One Big Deal. Scores of Smaller Deals

Lots of Buying (and Some Selling) at Agency Companies

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Maurice Levy & John Wren
Maurice Levy & John Wren Credit: Bloomberg

The proposed merger of Publicis Groupe and Omnicom Group -- with a combined market cap of $37 billion and 2013 revenue of nearly $24 billion -- would be by far the biggest agency deal in history, surpassing Dentsu Inc.'s $4.9 billion acquisition of Aegis Group (2013) and WPP's $4.7 billion purchase of Young & Rubicam (2000).

Agency Report's rankings flag Publicis and Omnicom agencies with a triangle to show the potential reach of Publicis Omnicom Group, but the "merger of equals" announced last July is not a done deal. While the companies originally expected to complete the merger in fourth-quarter 2013 or first-quarter 2014, the deal still needs regulatory approval in China and agreement on tax issues in France, the U.K. and the Netherlands.

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Publicis Chairman-CEO Maurice Levy told analysts April 17: "I have to say again and again and again that I'm confident that the deal will go through." But Omnicom President-CEO John Wren said on an April 22 earnings call: "Given the proposed merger's complexity and open issues, at this point it's not practical to predict exactly when the transaction will close."

Buying and selling
Publicis Omnicom Group would be the big deal, but agency companies over the past year have done other buying -- and selling. Among the deals:

  • WPP paid $346 million for acquisitions and investments in 2013, when it completed "62 small and medium-sized acquisitions." WPP Chief Executive Martin Sorrell did the equivalent of more than a deal a week.
  • Publicis in January 2013 bought digital network LBi for an enterprise value of $591 million. It merged Digitas and LBi to form DigitasLBi. U.S. acquisitions in 2013 and 2014 included digital agencies Hawkeye and Engauge Marketing and public-relations agency Qorvis Communications.
  • Interpublic Group of Cos.' 11 acquisitions in 2013 included U.K. digital agency Profero (now Lowe Profero) and Indian digital agency Interactive Avenues.
  • Omnicom in 2013 made eight acquisitions and sold Bernard Hodes Group, a recruitment agency. Omnicom said: "None of our acquisitions or dispositions in the three-year period ended [December 2013] was material to our financial position or results of operations."
  • Accenture in July 2013 paid $316 million for digital agency Acquity Group, aligning it with Accenture Interactive.
  • Dentsu Inc. in February 2013 sold its remaining Publicis shares back to Publicis for $243 million, the final step in unwinding an investment that dated to 2002, when Publicis bought Dentsu-backed Bcom3 Group, the then-parent of Leo Burnett and Starcom MediaVest.
  • Publicis in December 2013 sold its 1.1% stake in Interpublic, scoring a capital gain of about $65 million. The Interpublic stock was a holdover from an investment Publicis made in FCB in 1988 as part of a later-aborted global alliance with FCB; Interpublic bought True North Communications (parent of FCB) in 2001.

See profiles of World's 50 Largest Agency Companies in Agency Family Trees 2014.

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