Omnicom is buying Interpublic Group in a $13-billion stock-for-stock deal that will create an advertising powerhouse with combined annual revenue of almost $26 billion.

Shareholders of The Interpublic Group of Companies Inc. will receive 0.344 Omnicom shares for each share of Interpublic common stock that they own. Omnicom shareholders will own 60.6 per cent of the combined company and Interpublic shareholders will own 39.4 per cent.

The combined company will keep the Omnicom name and trade under the “OMC” ticker symbol on the New York Stock Exchange. The deal is expected to have annual cost savings of $750 million.

Omnicom CEO John Wren will lead the new company, while Interpublic boss Philippe Krakowsky will serve as co-chief operating officer.

The deal, announced on Monday, could attract regulatory scrutiny as it seeks to merge the world’s third-largest ad buyer, Omnicom, with the fourth-largest — Interpublic.

The transaction is targeted to close during the second half of next year. It still needs the approval of Omnicom and Interpublic shareholders.

Shares of Interpublic jumped more than 15 per cent before the market opened on Monday, while Omnicom’s stock fell more than 2 per cent.

“Through this combination, we are poised to accelerate innovation and harness the significant opportunities created by new technologies in this era of exponential change,” Wren said in a statement.

The deal comes after years of transformation and disruption for the advertising industry, as digital ads overtook analog advertising channels and tech giants including Meta and Alphabet, the respective parent companies of Facebook and Google, moved further into the territory once dominated by traditional agencies.

The “Big Four” ad companies adapted by remaking themselves into digital technology companies, often through acquisitions and consolidation. The two largest advertising companies, WPP and Publicis Group, aggressively bought up tech companies and added more advanced offerings to their stables.

Interpublic has lagged its rivals. In recent years, it lost critical clients including Verizon and BMW. Interpublic’s revenue was flat in 2023 compared with 2022, and it forecast growth of 1 per cent for 2024.

New York Times News Service; With inputs from Reuters and AP