Advertising stocks are sliding lower on news that Omnicom (OMC) is acquiring rival Interpublic Group (IPG) in a blockbuster $13 billion deal that will create the world’s largest advertising conglomerate and has the potential to reshape the global advertising Industry.
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The combination of Omnicom and Interpublic Group will create a new advertising juggernaut that has annual revenues of more than $20 billion and includes a client roster of blue-chip companies such as Amazon (AMZN) and PepsiCo (PEP), to name only a few.
Once finalized, the deal is expected to help the two ad firms better compete in the online advertising space against technology heavyweights such as Alphabet (GOOGL) and Meta Platforms (META). The acquisition is also expected to help Omnicom and Interpublic fend off threats from generative artificial intelligence (AI).
Rival Ad Stocks Fall
The merger of the world’s third- and fourth-largest advertising companies will surpass WPP (WPP) as the largest player in the ad space. However, Omnicom’s acquisition of Interpublic Group is not sitting well with rival advertising companies whose stocks turned lower following news of the deal.
The stocks of rivals such as Magnite (MGNI), QuinStreet (QNST), and The Trade Desk (TTD) were each flat or down as much as 7% on the day. The deal between Interpublic and Omnicom is expected to face regulatory scrutiny as the combined company will dominate the ad-buying space.
OMC stock is down 10% on news that it is acquiring Interpublic Group.
Is OMC Stock a Buy?
Omnicom stock has a consensus Strong Buy rating among six Wall Street analysts. That rating is based on five Buy and one Hold recommendations made in the last three months. The average OMC price target of $118.17 implies 27.02% upside from current levels.
