Jobs at risk in US advertising megamerger: Omnicom and Interpublic to join forces in £10bn deal

WPP’s status as the world’s biggest advertising company is under threat after two US rivals agreed to a multibillion-dollar megamerger.

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

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

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

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

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

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

If completed, it will mean WPP will be overtaken in terms of advertising sales for the first time in 16 years.

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

Combined, the two US companies reported revenues of around £20bn last year compared to WPP’s £14.8bn.

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

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

But shares rose 2.8 per cent, or 24 pence, to 891.6 pence yesterday, as investors considered whether the merger could provide opportunities for the group.