Media stocks have been buoyant in recent months but some in adland seem to be piling into Interpublic Group (IPG) and Havas. And they are not the only ones.
While the Publicis Omnicom deal seemed to have caught much of the ad industry by surprise, Havas and IPG share prices have jumped significantly over the last month. The spurt started at least two weeks before the proposed merger went public.
IPG shares began to climb markedly at the start of July and accelerated sharply on the Publicis Omnicom announcement. They are now up 14% since 1 July.
Havas shares are also up 14% for July, but they took a little longer to pick up. The share price began to rise from mid-July and accelerated sharply on the back of the Omnicom Publicis merger announcement.
Most of the industry now expects further consolidation and those two companies are the ones they expect to be bought. There is usually a significant premium paid when companies are acquired, and it appears there's a rush to cash in. One financial analyst told AdNews that it was "inevitable" that WPP would buy IPG. "If this merger goes through [WPP] will have to get into bed with IPG".
He said it was "hard to get excited" about the Publicis Omnicom deal "even for shareholders" because it will take give years to see cost savings fully implemented. "By that time the world may have changed."
At least one executive from an agency that may become Publicis Omnicom-owned in Australia agreed: "As soon as I saw it was on, it was 'fuck buying Publicis/Omnicom shares' I went straight to IPG."
The same executive said he was aware of competitors and collegues doing likewise.
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