Here's The One Reason Interpublic Takeover rumours DO Make Sense

Earlier this week, Interpublic Group CEO Michael Roth gave the Goldman Sachs Communacopia conference three reasons why there wasn’t veracity to the rumour that Publicis was going to by IPG:

  1. Capital: “You do a transaction if you need capital. And some of you have heard me say this, but fortunately, we’re in a mode right now where we’re returning capital to our shareholders in the form of buybacks.
  2. IPG is very competitive
  3. There hasn’t been an attractive asking price.

Hmm. That last reason leaves the door cracked open for anyone who might want to offer an attractive asking price. If you want more evidence for why IPG is a takeout target, here’s the picture for long-term holders of IPG stock. Basically, if you bought the stock anytime after 2000 — except for buyers during the brief period in the 2008 crash — your investment went nowhere:

IPG’s stock history:

interpublic stock

Photo: Yahoo Finance

Now here’s the history of Publicis Groupe, which is the long-rumoured potential acquirer of IPG:

Publicis stock history

Yahoo Finance

Let’s do a side-by-side:

interpublic and publicis stock history

Yahoo Finance

No wonder, when the Financial Times wrote a piece speculating that there would be an Interpublic-Publicis merger in April, Interpublic’s price rose to $15 a share — unheard of since 2004.

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