UPDATED: There are no talks, Publicis says.
EARLIER: Interpublic Group, the giant ad agency holding company that owns DraftFCB, Deutsch and McCann Erickson, declined to deny today that it was the subject of a takeover bid by Publicis Groupe, the even bigger French company that owns Saatchi & Saatchi and Leo Burnett.
Such a merger would completely reshape the ad agency landscape, creating a new entity to rival WPP Group, the current largest agency network, which owns Y&R, JWT and Ogilvy.*
We predicted back in April that Interpublic was one of the four companies due for a consolidation move. Since then, Dentsu has moved to buy Aegis -- which we also suggested was the kind of thing that might happen.
“We are aware of the activity in our stock today. It is our policy not to comment on market rumors or speculation.”
The "activity" came alongside a blog item from the Financial Times which stated that Publicis was weighing a $6 billion, $15 a share deal for IPG, which closed under $10 Friday.
Such a deal would achieve three things:
- It would allow Publicis chief Maurice Levy to retire (he's already said he wants to go) atop the largest advertising empire in history.
- Said empire would rival that of Martin Sorrell's at WPP -- the British CEO is Levy's infamous nemesis. Drawing level with Sorrell (he's also near retirement) would rub the latter's nose in it, so to speak.
- It would give IPG CEO Michael Roth a $34 million severance package (see page 80). Given that Roth is only the 4th best paid executive on Madison Avenue, the offer must be tempting.
Aside from the money, the deal would also solve the difficult narrative of Roth's tenure at IPG: He came from the finance sector, not the ad biz, and even though he has been boss at IPG for years his own agency CEOs don't describe him as an adman or invite him to major client pitches, sources have told us.
IPG's stock has dwindled from a high of $57.69 in 2000 to the $10 range today. Currently, McCann is a sore spot for the network, having lost some major clients (Nescafe and Exxon) and failed to replace them. The agency's "missteps" were cited as a risk to the stock in a recent analyst note from Matt Chesler and his crew at Deutsche Bank.
Thus the argument: Selling to Publicis would return value to IPG's battered stockholders; make Roth rich; and make the McCann issue someone else's problem.
Today, however, Chesler's colleague Patrick Kirby poured cold water on the deal, saying in a new note this afternoon, "We do not think this is a strategically necessary or attractive deal right now." He noted that Publicis-IPG rumors have been around for years and were cited in a Deutsche Bank note as far back as 2006.
*Correction: On 2011 numbers, a combined Publicis-IPG would have $14.2 billion in revenues; WPP had $15.64 billion in revenues. This item previously stated incorrectly that WPP would be No.2.
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