Omnicom CEO John Wren and IPG CEO Philippe Krakowsky told analysts and investors today that they had been talking about a potential tie-up for nearly a year prior to this morning’s announcement that Omnicom will buy IPG.  

The deal, which the firms expect to take at least seven months to complete, is a game changer for the industry, reducing the “Big 6” holding companies to the Big 5: Omnicom, Publicis, WPP, Dentsu and Havas.  

And the ad world was buzzing with speculation that the Omnicom-IPG marriage (or engagement at this point) would drive further consolidation, possibly even a merger of WPP and Publicis, currently the top holding companies by revenue. Omnicom and IPG are the third and fourth largest respectively. 

On the call Wren and Krakowsky (Joined by Omnicom CFO Phil Angelastro and IPG CFO Ellen Johnson) talked extensively about their companies’ complimentary offerings, synergies and the ability to invest more money to drive technological innovation faster than rivals. And platforms like Acxiom and Flywheel Digital will provide clients with unprecedented knowledge of client customers.  

The firms have identified $750 million in costs that can be eliminated, albeit over the first three years of being one company. To get there, the CEOs acknowledged there would be one-time expenses of $450 million. Savings will also be achieved via contracts with third party vendors and real estate portfolios and “internal consolidation” as Angelastro put it, although Wren stressed that no decisions have been made yet about how different agencies would be aligned with each other. 

Wren has been through a megamerger engagement once before—with Publicis Groupe back in 2013. That engagement broke off in 2014.  

Analysts wanted to know what was different this time around. “It didn’t come together for lots of reasons,” Wren said of his company’s attempted combination with Publicis. Cultural differences, often “unspoken things got in the way.” 

With IPG, he said, “we share core values.” And many employees at both companies have worked at both Omnicom and IPG agencies leading to a more general familiarity by staff with both firms. 

“The lessons learned won’t be repeated,” said Wren.  

Both leaders dismissed the idea that staff and clients would be jumping ship to any significant degree during the time it takes to complete the merger.  

Krakowsky said that when talking with clients and the leadership teams at the holding companies there is a sense of “real palpable excitement,” about what the transaction could lead to. 

Wren acknowledged that some clients may bail, although he said it would be “short sighted” of them to do so. “Someone would be hard pressed not to conclude that we’re the best option.” 

Also, he said, client conflicts “really aren’t the same issue it was in the 80’s, 90’s and early 2000s.” Today, he said, “we all have conflicts [which have been] solved with different solutions.” Some clients may need some hand holding to show that they are “loved just as much.” 

Krakowsky agreed noting that service offerings “are much broader now... It’s not the kind of issue it was.” 

For employees, Wren said that the combination will provide “incredible job opportunities” for the “best and brightest.” 

As to regulatory scrutiny, Wren said there has been much discussion internally about it and “we’re pretty confident this won’t create any regulatory issues. We’re a component of the marketing mix,” and the deal “allows us to take control of our future rather than technology.” 

Wren also cited the transition to the Trump administration which by most accounts will be “more friendly to business.” 

He recalled how China held up Omnicom’s deal with Publicis for nine months and he was asked at the time if there was a plan B. “There was no Plan B,” he said.  Now he added, “there’s a Plan B and C,” to keep the regulatory approval process on track. 

The agreement is complimentary from a geographic standpoint, Wren said, noting that it further strengthens Omnicom’s footprint in Latin America and Asia and IPG’s footprint in Europe. Both benefit in North America.  

The firms will also help each other strengthen capabilities. Wren cited principal media buying for clients where Omnicom can help IPG which is still refining its offer. “For us it’s owning the data,” where IPG’s Axiom unit “takes that question off the table.” 

The deal will help the combined company innovate at a faster pace, with a bigger war chest, said Wren. Together he said the firm would have two-thirds more capital to invest in those efforts, with a payout across a bigger set of clients. 

Once the SEC blesses the deal, the companies will seek shareholder approval. Then, about a dozen and a half jurisdictions globally need to sign off, said Wren.