If the industry rumour mill is to be believed, a takeover of one of the “big six” agency groups or even a merger between two of them could be on the cards.

Over the past six months, there has been some wild chatter at the highest levels of the industry about supposed M&A approaches and potential deal-making.

Part of the reason for buyer interest is a big variation in revenue growth across the big six. There was a spread of more than 10% last year between the top performer, Publicis Groupe, which grew 6.3%, and Dentsu, which fell 4.9%.

Havas and Omnicom have been growing at a reasonable rate behind Publicis but WPP and Interpublic Group have been lagging with little or no organic revenue growth.

Publicis has “extracted itself from the pack”, as Arthur Sadoun, the chief executive, likes to say, and shown it can grow faster than its peers, increase profit margin and take market share — thanks to its focus on media, data, tech and consulting, and its simpler operating model.

With Publicis’ share price more than doubling in 18 months while others languish, and the stock continuing to break new records since the start of 2024, it looks like there is a valuation gap between the French agency group and its rivals.

Publicis, Omnicom and WPP all have roughly similar revenues yet that’s not reflected in their stock market valuations. Publicis is worth about $28bn, Omnicom $19bn, IPG $12bn, WPP $11bn and Dentsu $7.4bn at current exchange rates. Vivendi, the conglomerate that owns Havas, is worth about $11bn.

All of this is the context that has been grist to the M&A rumour mill in the past six months.

‘Febrile’ atmosphere

I have been wary of publishing speculation and, when I have asked the companies involved, the responses have varied from the circumspect to the colourful. “I doubt it”, “daft questions” and “bullshit” have been some of the replies.

Yet taken together, the rumours have created what one insider calls a “febrile” atmosphere at the top of the agency sector.

Some companies would prefer it if I did not link them to any M&A speculation because it can be destabilising, and it is important to note no concrete evidence of a deal has yet to emerge.

With those caveats in mind, here is a list of the rumours that Campaign has heard in the past six months in roughly chronological order.

  • IPG and Omnicom were said to have discussed a potential tie-up in autumn 2023 but sources familiar with the situation said it was not true. They told Campaign the two companies had contact but only because Omnicom was helping Ascential on the sale of HudsonMX, following Omnicom’s $900m purchase of sister business Flywheel (the biggest acquisition in the US agency group’s history) from Ascential.
  • Multiple potential suitors, including private equity groups, were said to have looked at buying a stake in or acquiring all of WPP around the turn of the year. Multiple sources cited Kohlberg Kravis Roberts, which is already an investor in part of WPP (after buying a 29% stake in corporate public relations arm FGS Global a year ago). KKR told Campaign it had no comment. WPP did not comment but a source familiar with the company played down the suggestion there had been any such talks. WPP has close links to private equity as Bain Capital has a 60% stake in Kantar and Roberto Quarta, the chair of WPP, is a senior partner at Clayton, Dubilier & Rice. When Campaign asked Mark Read, the chief executive of WPP, in February whether he would consider selling a stake in any other parts of the group beyond Kantar or FGS, he said: “I wouldn’t speculate that we’d do that elsewhere.”
  • Other talk has included a suggestion that Vivendi, the owner of Havas, might want to do a deal with WPP. Vivendi did not comment but a source said it had no interest. Similarly, WPP did not comment but a source dismissed it. Vivendi previously announced in December 2023 that it is planning a break-up of the group and plans to spin off Havas as standalone company by the start of 2025. Yannick Bolloré, the chief executive of Havas, told Campaign in March that he is not looking to sell the agency group and is committed to staying until 2035.
  • Another merger rumour did the rounds in early 2024: IPG and Publicis were said to have discussed a potential tie-up but sources on both sides of the Atlantic rubbished the suggestion.
  • Chatter about IPG broke into the open in March when Betaville, a UK financial blog site, reported on what it called “uncooked” speculation that the agency group has attracted takeover interest, without citing further detail. IPG’s share price briefly spiked more than 5% but promptly fell back after the company told Bloomberg: “We don’t comment on rumour or innuendo.”
  • Japan’s Dentsu, the laggard of the big six groups because of its under-performing international business, has also attracted interest after Silchester, a UK-based investor, built up an 8% stake last year. Hiroshi Igarashi, the chief executive of Dentsu, has rejected any suggestion that Dentsu might consider selling off the international arm. It is “totally not part of my mindset” and the group is focused on its move to “One Dentsu” globally, he told Campaign last year.
  • Outside the big six, Stagwell is said to have made an approach for Sir Martin Sorrell’s S4 Capital last year, according to the Wall Street Journal in March. Both companies did not comment and S4 Capital did not feel it necessary to make a statement to the stock market. A source familiar with S4’s thinking said there have been no “credible” offers.

It is no wonder that some senior figures in the ad industry do not feel the status quo can hold.

Memorably, the last time that two groups, Publicis and Omnicom, attempted a mega-merger in 2013 it collapsed and, as I wrote last summer, it is still not clear if the stars will align for a similar-sized deal to succeed.

Higher interest rates, geopolitical instability from Ukraine to Gaza to Asia and the disruptive impact of artificial intelligence are new and significant risk factors. However, arguably, client conflict and regulatory issues are not such big obstacles when the tech giants have become so much bigger than the agency groups.

Typically, one private equity firm would find it difficult to make a $10bn-plus purchase on its own. But beyond the advertising world, private equity firm Silver Lake agreed to buy out talent and entertainment agency Endeavor and take it private for $13bn at the start of April.

In the aftermath of the last wave of deal-making a decade ago, when Dentsu bought Aegis, I asked Michael Roth, then the CEO of IPG, how he handled that M&A frenzy.

“We have an obligation to our shareholders to look at every opportunity to enhance shareholder value,” he said. “I never did not take a meeting with anyone that was interested in IPG.”

Gideon Spanier is UK editor-in-chief of Campaign.

This article originally appeared on Campaign UK.