Omnicom, IPG CEOs eye M&A with $3.3B free cash flow

Catch up quick: The proposed deal would create the world's largest ad agency with an aim of helping brands navigate the $1 trillion ad industry.

• Omnicom CEO John Wren will serve as CEO of the combined entity. IPG CEO Philippe Krakowsky and its COO Daryl Simm will serve as co-presidents and COOs.
• The $13.3 billion stock-for-stock deal will be a 60-40 split in favor of Omnicom shareholders once complete.

What they're saying: Wren says the ad agency has long been committed to using its free cash flow on acquisitions, and defending their dividends. The combined business would have a free cash flow of $3.3 billion.

• Potential new acquisitions would add new expertise or expand its own capabilities, Wren says.
• "We'll have the resources to do it. We have the talent, team to look at it," Wren says. "We will be active."

The big picture: The industry consolidation comes as ad agencies adapt to challenges from the rise of generative AI, self-serve ad buying platforms and other technological changes.

• "The speed at which the ecosystem is changing is pretty dramatic and what that means is that in order to help clients navigate this moving very fast, very complex, you need a very, very comprehensive set of services, capabilities, expertise," IPG's Krakowsky tells Axios in a joint interview with Wren.

• Omnicom and IPG each have pursued their own large acquisitions. Back in 2018, IPG acquired data company Acxiom. Last week, it bought retail analytics firm Intelligence Node. Omnicom closed its acquisition of digital commerce company Flywheel Digital for $835 million this year.

The bottom line: Wren says he and Krakowsky had been talking for at least 11 and a half months and stressed the matching of culture and values.

• "Whatever we do here can't be just two big companies becoming a bigger company," Wren says.