Jobs at risk from US mega-merger: Omnicom and Interpublic join forces in £10 billion deal

WPP’s status as the world’s largest advertising agency is under threat after two US rivals agreed a multi-billion pound mega merger.

New York-based Omnicom and Interpublic, the second and fourth largest advertising agencies, have struck a £10 billion deal to join forces in a move that will dethrone FTSE 100 member WPP.

The partnership is likely to fuel fears of job losses in Britain, as both entities employ thousands of people across their various advertising agencies and PR firms in Britain, and plan to save £585 million in costs through the merger .

Omnicom has more than 75,000 employees worldwide, while Interpublic employs more than 57,000 employees.

Under the terms of the deal, Interpublic shareholders will receive 0.344 Omnicom shares for each share they own in the company, giving them control of 39.4 percent of the expanded group.

Omnicom CEO John Wren said: “Now is the perfect time to bring together our technologies, capabilities, talent and geographic footprint to deliver superior, data-driven results to customers.”

The merger is expected to receive intense attention from competition regulators given the company’s potential dominance over the sector.

If completed, it will mean WPP will be overtaken in advertising sales for the first time in sixteen years.

The London-based company will be dwarfed by its combined rivals in terms of revenue and market capitalization, with Omnicom valued at £15.8 billion, while Interpublic is worth £8.5 billion compared to WPP’s £9.4 billion .

Combined, the two US companies reported revenues of around £20 billion last year, compared with £14.8 billion for WPP.

The deal would also reduce the world’s ‘Big Four’ advertising agencies to three, with WPP competing with the recently merged company, as well as French giant Publicis Group, which owns advertising agency Saatchi & Saatchi.

WPP shares have struggled following the departure of founder and long-serving boss Sir Martin Sorrell in 2018.

But shares rose 2.8 per cent, or 24p, to 891.6p yesterday as investors questioned whether the merger could create opportunities for the group.