Merger of the World's 3rd and 4th Largest Advertising Firms... Aiming to Become Number One Instantly

Approval by US competition authorities remains a variable

Global advertising firm Omnicom is set to acquire its competitor Interpublic, according to a report by The Wall Street Journal (WSJ) on the 8th (local time). If this merger and acquisition (M&A) between the two groups is successful, Omnicom is expected to emerge as the world's largest advertising company. However, the possibility that U.S. antitrust authorities, who are critical of any single company dominating the market, may intervene remains a variable.

According to WSJ, Omnicom plans to announce this week a deal to purchase Interpublic for $13 billion to $14 billion (approximately 18 trillion to 20 trillion KRW). Interpublic's market capitalization was estimated at about $11 billion (approximately 15 trillion KRW) based on the closing price on the 7th.

If the merger between Omnicom and Interpublic, which rank 3rd and 4th respectively in advertising market share, is completed, it is expected to challenge the position of the industry leader, WPP Group. WSJ reported, "Combining the net profits of Omnicom and Interpublic from last year exceeds $20 billion," adding, "This means they could topple WPP, the world's largest advertising company, which recorded $15.1 billion in net profit last year."

At the same time, this deal is expected to become the largest transaction in the advertising industry. In this regard, WSJ evaluated that the merger could greatly help these companies respond closely in the advertising industry, which is being driven by artificial intelligence (AI) and data. Traditional advertising firms have expressed a sense of crisis that their revenue models could be undermined by the recent generative AI boom, following big tech companies like Alphabet (Google's parent company) and Meta Platforms, which are deeply advancing advertising businesses using AI.

However, there is a significant possibility that U.S. antitrust authorities will block this merger plan. Since the Biden administration, the Federal Trade Commission (FTC) has been blocking major mergers based on antitrust provisions. Currently, many expect that the antitrust regulatory stance will continue even after the start of the second Trump administration. Recently, President-elect Donald Trump nominated Gale Slater, a strong advocate for increased big tech regulation, as Deputy Assistant Attorney General for Antitrust at the Department of Justice, who is also an economic advisor to Vice President-elect JD Vance, and left critical posts about monopolies on Truth Social.