Is Interpublic's Stock Price Signaling That It's a Takeover Target (Again)?
IPG has been on the rise since November, in fact, when it bottomed out at just below $9.50. Currently, it's a little above $13.
Why would such a poor performance merit an increase in price? (After all, revenue increased at Omnicom, its rival, in the same period.
Interpublic CEO Michael Roth said he expected growth to return to the group in 2013. So that might be one factor. And the stocks of Omnicom and WPP Group have also risen over the same time-period — so maybe IPG is getting some benefit from category-wide investors.
But then there's the expectation/speculation in some quarters that Interpublic might be a merger target.
I had dinner recently with a source who controls several billion dollars in ad media-buying, and this executive talked as if everyone already knew that IPG was likely to get bought.
There's also the subject of Roth himself.
He was brought in to run IPG in the mid-2000s after an accounting scandal. He has since cleaned up the joint, but Interpublic hasn't really regained momentum over the years. McCann and DraftFCB both, pointedly, are in urgent need of big wins to replace lost business (Microsoft and S.C. Johnson both left IPG in 2012).
He will receive $34 million if IPG undergoes a change of control, according to IPG's SEC filings. He is highly incentivized to sell the company, in other words. Roth would get paid millions more for selling than for doing anything else, such as continuing to run the company or retiring without a buyout.
Accepting an offer from a suitor would boost the price of the stock and return at least some of a lost decade of value for IPG shareholders. That's a good story to end on, too.
Or he could wait for McCann or DraftFCB to turn around.
Interpublic always declines to comment on such rumors.