All eyes on the No 3, Interpublic Group: Will it stand alone?

The company's strong presence in markets like India gives it the confidence to proceed on its own, rather than sell out

The Publicis-Omnicom merger has not only put the spotlight firmly on the two ad majors but also on the third player in the pecking order of holding companies — Interpublic Group (IPG). Speculation that it will eventually be acquired in the new round of consolidation triggered by the Omnicom-Publicis deal has pushed up its share price by nearly five per cent in the past few days — the highest it has seen in nine years. While IPG has long been a takeover target, never has it hogged so much limelight, say ad experts.

The sudden investor frenzy and talk about it being acquired, prompted IPG Chairman and Chief Executive Officer Michael Roth to issue an internal memo a day after the merger announcement on Sunday, saying he did not see how being big could make for better creative ideas or lead to better integration of marketing disciplines. “Our focus is and will remain on our clients and our people, which are the strength  of our company. We are confident in the quality and competitiveness of our digital and media offerings, and well positioned in emerging markets. Ultimately, we’re all about our clients’ success and we intend to keep it that way,” he said in the memo.

Does that mean IPG is closed to the prospect of being bought out? For now at least, Roth seems unwilling to bite the bullet. There are reasons for this, experts point out. The key being its strong presence in markets such as India with agency brands Lowe and Partners, McCann Worldgroup and Draftfcb, which give it the confidence to carry on, rather than sell out. During his maiden trip to India in November 2011, Roth minced no words when he said, “India is an important market and we will not ignore it. We have full control of our agency networks here, including McCann, Lowe and Draftfcb. Each one of them has a good set of clients. Lowe has Unilever, McCann has Coca-Cola and Draftfcb has the Tata Group brands (such as Tata Motors and Tata Docomo). But I am not averse to more business here.”

His agencies have not disappointed him on that count. McCann, for instance, in the past two years has added key accounts such as General Motors, Aircel and VIP Industries (maker of VIP bags) to its roster of clients in the country. Lowe has a steady bunch of brands outside of the Unilever fold including A-listers such as Idea, Havell's, Tanishq and Bajaj Auto. Draftfcb, meanwhile, has clients such as Amul, one of the largest FMCG brands in the country.

A takeover of IPG will mean straight access to these businesses and a chance to keep them all together under one umbrella, just like the Omnicom-Publicis deal has brought Coca-Cola and PepsiCo businesses together, since the two advertising groups handle some brand or the other belonging to the two companies in different markets.

A potential acquisition of IPG will also mean control of its media entities bunched under Mediabrands and PR outfits such as Weber Shandwick, which are counted among the top PR agencies in markets such as India, competing with Edelmen, an independent, Burson-Marsteller from WPP and MSL from Publicis.

Therefore, the acquirers, notably WPP, might have to make a very tempting proposition to IPG if it is to go to bed with it. As Roth hinted in his internal memo two days ago:

“We don't see the need for major M&A (merger and acquisition) to keep delivering on our plan to move Interpublic forward. We've come a long way during the past few years. Together, we've proven that we have the talent and agency brands to compete and win across our offerings. Our expectations are to see more of this type of success, driven by our collective talent and dedication.”