Interpublic, Takeover Target? (IPG)(PUB)

Interpublic is one of the world’s largest advertising agency holding companies. But it has been beset by accouting problems, bad management and accounting problems. Press reports are saying that Publicis, another large ad agency group may be considering a buy-out of its larger rival. The two companies, if combined, would be the largest ad firm in the world.

Interpublic’s problems are reflected in its stock price. The company’s shares traded for $35 in early 2002. They now change hands at about $12 after falling as low as $7.82 earlier this year.

Publicis has denied the rumors. But, the combination may make a good deal of sense, and public denials from companies involved in takeovers have oftem meant little in the past. Publicis share have been a crowd pleaser on Wall St. rising from $25 five years ago to just below $29 now, handily beating the S&P 500 over the period.

Publicis has a market cap of over $7 billion. Interpublic’s is $5.3 billion, even with its larger revenue.

Ruling the combination out would be a mistake.

Douglas A. McIntyre can be reached at [email protected]. He does not own securites in companies that he writes about.