Omnicom initiates $2.95 bn exchange offer for Interpublic notes as merger plans advance

New Delhi: Omnicom Group has initiated exchange offers for up to $2.95 billion in outstanding senior notes issued by The Interpublic Group of Companies, Inc. 

The deal, announced on December 8, 2024, aims to create the world’s largest advertising agency with a combined market value of approximately $30 billion.

The exchange offers target six series of IPG’s senior notes, with maturities spanning from 2028 to 2048, totalling $2.95 billion in aggregate principal amount. Eligible holders who tender their notes by the early tender deadline of August 22, 2025, will receive new Omnicom senior notes with identical interest rates, maturity dates, and payment schedules as the existing IPG notes, along with a cash payment of $1 per $1,000 principal amount, which includes a $30 early tender payment and a $1 consent payment. 

The new Omnicom notes will be unsecured senior obligations, ranking equally with Omnicom’s other unsecured senior indebtedness, but will feature less restrictive covenants compared to the existing IPG notes.

In conjunction with the exchange offers, Omnicom is soliciting consents from IPG noteholders to amend the indentures governing the existing IPG notes. These proposed amendments would eliminate certain covenants, restrictive provisions, and events of default, a move described as “covenant stripping” that could reduce protections for noteholders who choose not to participate in the exchange. 

If successful, these amendments may also lead to reduced liquidity for any remaining IPG notes, potentially impacting their market value. The consent solicitations require approval from holders of a majority of the outstanding principal for each series of notes.

The exchange offers and consent solicitations are contingent upon the completion of the merger, which is expected to close in the second half of 2025, pending regulatory approvals and other customary closing conditions. However, the merger itself is not dependent on a successful debt exchange. 

The transaction has already cleared a significant regulatory hurdle in the UK, with Britain’s competition watchdog opting not to refer the $13.25 billion deal for an in-depth investigation. Additionally, shareholders of both companies overwhelmingly approved the merger at special meetings held on March 18, 2025.

Omnicom’s acquisition of IPG is structured as a stock-for-stock transaction, with IPG shareholders receiving 0.344 shares of Omnicom for each IPG share, resulting in Omnicom shareholders owning 60.6% of the combined entity and IPG shareholders holding 39.4%.