.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On December 8, 2024, Omnicom Group Inc. (“Omnicom”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Omnicom, EXT Subsidiary Inc., a direct wholly owned subsidiary of Omnicom (“Merger Sub”), and The Interpublic Group of Companies, Inc. (“IPG”), pursuant to which, subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into IPG (the “Merger”), with IPG surviving the Merger as a wholly owned subsidiary of Omnicom. Each share of IPG common stock will be converted into, and represent the right to receive, 0.344 shares of common stock of Omnicom, plus cash in lieu of any fractional shares of Omnicom common stock that otherwise would have been issued. On March 18, 2025, the shareholders of each of Omnicom and IPG approved the Merger. On June 23, 2025, Omnicom and IPG announced that the U.S. Federal Trade Commission had concluded its antitrust review of the Merger and reached agreement with Omnicom and IPG on a mutually acceptable consent order. The parties’ obligations to complete the Merger are conditioned upon (i) the receipt of remaining regulatory approvals and (ii) certain other customary closing conditions. The Merger is not subject to a financing condition or the completion of the Exchange Offers or Consent Solicitations announced by Omnicom and IPG on August 11, 2025 related to IPG’s outstanding senior notes (the “Exchange Offers and Consent Solicitations”). Omnicom expects the Merger to close in 2025.
The following unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes. The unaudited pro forma condensed combined financial statements have been prepared from the respective historical consolidated financial statements of Omnicom and IPG and reflect transaction accounting adjustments related to the Merger. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and for the six months ended June 30, 2025 are presented as if the Merger had been completed on January 1, 2024. The unaudited pro forma condensed combined balance sheet as of June 30, 2025 is presented as if the Merger had been completed on June 30, 2025.
The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:
| ● | the unaudited consolidated financial statements of Omnicom included in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025; |
| ● | the unaudited consolidated financial statements of IPG included in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025; |
| ● | the audited consolidated financial statements of Omnicom included in its Annual Report on Form 10-K for the year ended December 31, 2024; |
| ● | the audited consolidated financial statements of IPG included in its Annual Report on Form 10-K for the year ended December 31, 2024; and |
| ● | other information relating to Omnicom and IPG contained in reports filed by Omnicom or IPG, as applicable, with the Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended. |
The unaudited pro forma condensed combined financial statements have been prepared to reflect adjustments to Omnicom’s historical consolidated financial information representing Omnicom management’s estimates based on information available as of August 11, 2025 and are subject to change as additional information becomes available and analyses are performed. However, Omnicom management believes that the assumptions provide a reasonable basis for presenting the significant effects of the Merger as contemplated, and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements. Accordingly, the unaudited pro forma condensed combined financial statements reflect the following adjustments, which include transaction accounting adjustments:
| ● | the reclassification of certain items within IPG’s historical presentation to conform to Omnicom’s financial statement presentation; |
| ● | the Merger, using the acquisition method of accounting, with Omnicom as the accounting acquirer and each share of IPG common stock converted into 0.344 shares of Omnicom common stock; and |
| ● | estimated purchase accounting adjustments and related impacts on the balance sheet and income statements. |
The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles. Omnicom has been treated as the acquirer for accounting purposes, primarily due to Omnicom stockholders holding majority voting interests in the combined company, Omnicom issuing equity interests to effect the Merger and the management of Omnicom continuing to manage the combined entity. Thus, Omnicom will account for the Merger as a business combination in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations. The total purchase price will be allocated to the acquired tangible and intangible assets and assumed liabilities based on their respective fair values. The fair values of the acquired assets and assumed liabilities of IPG have been measured based on various preliminary estimates using assumptions that Omnicom management believes are reasonable and based on currently available information. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of preparing the unaudited pro forma condensed combined financial statements. The final purchase accounting could be materially different from the preliminary estimates used to prepare the accompanying unaudited pro forma condensed combined financial statements which could have a material impact on the combined company’s future results of operations and financial position.
The unaudited pro forma condensed combined financial statements have been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial statements. The pro forma adjustments reflect transaction accounting adjustments related to the Merger, which are discussed in further detail below. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to represent the combined company’s consolidated results of operations or consolidated financial position that would actually have occurred had the Merger been consummated on the dates assumed or to project the combined company’s consolidated results of operations or consolidated financial position for any future date or period.
The accounting policies followed in preparing the unaudited pro forma condensed combined financial statements are those used by Omnicom as set forth in Omnicom’s audited historical financial statements. Based on Omnicom’s initial review and understanding of IPG’s summary of significant accounting policies included in IPG’s annual report on Form 10-K for the year ended December 31, 2024, management is not aware of any material differences to conform IPG’s historical financial information to Omnicom’s significant accounting policies. A more comprehensive comparison and assessment will occur, which may result in additional differences identified. Additionally, Omnicom has included certain reclassifications for consistency in the financial statement presentation, including with respect to certain IPG restructuring charges. These reclassifications have no effect on the previously reported total assets, total liabilities and shareholders’ equity, or net income of Omnicom or IPG. See Notes 2 and 3 in the Notes to Unaudited Pro Forma Condensed Combined Financial Statements for more information.
The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not reflect the costs of any post-close integration activities or any cost savings or synergies that may be achieved because of the Merger. The unaudited pro forma condensed combined financial statements do not give effect to the estimated impacts of the Exchange Offers and Consent Solicitations.
IPG and Omnicom have not had any historical material relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
2
Unaudited Pro Forma Condensed Combined Balance
Sheet
As of June 30, 2025
(in millions)
| Omnicom Historical | IPG Reclassified (Note 2) | Transaction Accounting Adjustments | Notes (Note 5) | Combined Pro Formas | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 3,300.4 | $ | 1,564.4 | $ | — | $ | 4,864.8 | ||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | 8,658.8 | 4,850.7 | — | 13,509.5 | ||||||||||||||||
| Work in process | 1,995.9 | 2,103.0 | — | 4,098.9 | ||||||||||||||||
| Assets held for sale | — | 1.8 | — | 1.8 | ||||||||||||||||
| Other current assets | 1,088.1 | 781.2 | — | 1,869.3 | ||||||||||||||||
| Total current assets | 15,043.2 | 9,301.1 | — | 24,344.3 | ||||||||||||||||
| Property and equipment at cost, less accumulated depreciation | 868.3 | 339.6 | — | 1,207.9 | ||||||||||||||||
| Operating lease right-of-use assets | 1,055.7 | 891.8 | — | 1,947.5 | ||||||||||||||||
| Equity method investments | 60.2 | 44.4 | — | 104.6 | ||||||||||||||||
| Goodwill | 11,001.8 | 4,798.1 | 2,576.6 | (b) | 18,376.5 | |||||||||||||||
| Intangible assets, net of accumulated amortization | 507.6 | 835.8 | 3,283.7 | (b) | 4,627.0 | |||||||||||||||
| Other assets | 251.8 | 816.3 | (29.0 | ) | (f) | 1,039.1 | ||||||||||||||
| TOTAL ASSETS | $ | 28,788.6 | $ | 17,027.1 | $ | 5,831.3 | $ | 51,647.0 | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 11,336.7 | $ | 7,185.9 | $ | — | $ | 18,522.6 | ||||||||||||
| Customer advances | 1,348.2 | 654.9 | — | 2,003.1 | ||||||||||||||||
| Current portion of debt | 1,398.6 | 0.1 | — | 1,398.7 | ||||||||||||||||
| Short-term debt | 22.3 | 37.6 | — | 59.9 | ||||||||||||||||
| Taxes payable | 262.1 | — | — | 262.1 | ||||||||||||||||
| Other current liabilities | 1,946.0 | 827.9 | 81.2 | (i) | 3,020.1 | |||||||||||||||
| 165.0 | (d) | |||||||||||||||||||
| Total current liabilities | 16,313.9 | 8,706.4 | 246.2 | 25,266.5 | ||||||||||||||||
| Long-term liabilities | 782.2 | 490.6 | 52.4 | (i) | 1,325.2 | |||||||||||||||
| Long-term liability - operating leases | 805.3 | 977.0 | — | 1,782.3 | ||||||||||||||||
| Long-term debt | 4,884.1 | 2,922.1 | (171.8 | ) | (b) | 7,634.4 | ||||||||||||||
| Deferred tax liabilities | 507.5 | 146.0 | 65.0 | (f) | 1,287.7 | |||||||||||||||
| 569.2 | (b) | |||||||||||||||||||
| Commitments and contingent liabilities | ||||||||||||||||||||
| Temporary equity - redeemable noncontrolling interests | 456.8 | 20.0 | — | 476.8 | ||||||||||||||||
| Equity | ||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||
| Preferred stock | — | — | — | — | ||||||||||||||||
| Common stock | 44.6 | 37.4 | 18.9 | (a) | 63.5 | |||||||||||||||
| (37.4 | ) | (c) | ||||||||||||||||||
| Additional paid-in capital | 481.8 | 460.0 | 8,928.8 | (a) | 9,410.6 | |||||||||||||||
| (460.0 | ) | (c) | ||||||||||||||||||
| Retained earnings | 11,769.5 | 4,294.3 | (4,459.3 | ) | (c) | 11,604.5 | ||||||||||||||
| Accumulated other comprehensive income (loss) | (1,270.9 | ) | (889.5 | ) | 889.5 | (c) | (1,270.9 | ) | ||||||||||||
| Treasury stock, at cost | (6,538.2 | ) | (189.8 | ) | 189.8 | (c) | (6,538.2 | ) | ||||||||||||
| Total shareholders’ equity | 4,486.8 | 3,712.4 | 5,070.3 | 13,269.5 | ||||||||||||||||
| Noncontrolling interests | 552.0 | 52.6 | — | 604.6 | ||||||||||||||||
| Total equity | 5,038.8 | 3,765.0 | 5,070.3 | 13,874.1 | ||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 28,788.6 | $ | 17,027.1 | $ | 5,831.3 | $ | 51,647.0 | ||||||||||||
Please refer to the notes to the unaudited pro forma condensed combined financial statements.
3
Unaudited Pro Forma Condensed Combined Statement
of Income
For the Six Months Ended June 30, 2025
(in millions except share and per share data)
| Omnicom Historical | IPG Reclassified (Note 3) | Transaction Accounting Adjustments | Notes (Note 5) | Combined Pro Formas | ||||||||||||||||
| Revenue | $ | 7,706.0 | $ | 4,859.4 | $ | — | $ | 12,565.4 | ||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Salary and service costs | 5,678.9 | 3,483.0 | (12.3 | ) | (h) | 9,149.6 | ||||||||||||||
| Occupancy and other costs | 640.5 | 644.4 | — | 1,284.9 | ||||||||||||||||
| Real estate and other repositioning costs | 88.8 | 321.3 | — | 410.1 | ||||||||||||||||
| Loss on disposition of subsidiary | — | 34.5 | — | 34.5 | ||||||||||||||||
| Costs of services | 6,408.2 | 4,483.2 | (12.3 | ) | 10,879.1 | |||||||||||||||
| Selling, general and administrative expenses | 288.3 | 86.8 | (1.4 | ) | (h) | 373.7 | ||||||||||||||
| Depreciation and amortization | 117.7 | 122.2 | 142.4 | (e) | 382.3 | |||||||||||||||
| Total operating expenses | 6,814.2 | 4,692.2 | 128.7 | 11,635.1 | ||||||||||||||||
| OPERATING INCOME | 891.8 | 167.2 | (128.7 | ) | 930.3 | |||||||||||||||
| Interest expense | 121.7 | 100.6 | 6.3 | (j) | 228.6 | |||||||||||||||
| Interest and other income, net | 51.6 | 57.0 | — | 108.6 | ||||||||||||||||
| INCOME BEFORE INCOME TAXES AND INCOME (LOSS) FROM EQUITY METHOD INVESTMENTS | 821.7 | 123.6 | (135.0 | ) | 810.3 | |||||||||||||||
| Income tax expense | 241.2 | 45.4 | (31.3 | ) | (k) | 255.3 | ||||||||||||||
| Income from equity method investments | 0.7 | 0.1 | — | 0.8 | ||||||||||||||||
| Net Income | $ | 581.2 | $ | 78.3 | $ | (103.7 | ) | $ | 555.8 | |||||||||||
| Net income attributed to noncontrolling interests | 35.9 | 1.2 | — | 37.1 | ||||||||||||||||
| NET INCOME ATTRIBUTED TO SHAREHOLDERS | $ | 545.3 | $ | 77.1 | $ | (103.7 | ) | $ | 518.7 | |||||||||||
| Earnings per share attributed to shareholders: | ||||||||||||||||||||
| Basic | $ | 2.78 | $ | 0.21 | $ | — | $ | 1.61 | ||||||||||||
| Dilutive | $ | 2.77 | $ | 0.21 | $ | — | $ | 1.61 | ||||||||||||
| Weighted average shares | ||||||||||||||||||||
| Basic | 195.8 | 370.2 | (244.4 | ) | (g) | 321.6 | ||||||||||||||
| Dilutive | 197.1 | 372.5 | (246.7 | ) | (g) | 322.9 | ||||||||||||||
Please refer to the notes to the unaudited pro forma condensed combined financial statements.
4
Unaudited Pro Forma Condensed Combined Statement
of Income
For the Year Ended December 31, 2024
(in millions except share and per share data)
| Omnicom Historical | IPG Reclassified (Note 3) | Transaction Accounting Adjustments | Notes (Note 5) | Combined Pro Formas | ||||||||||||||||
| Revenue | $ | 15,689.1 | $ | 10,691.7 | $ | — | $ | 26,380.8 | ||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Salary and service costs | 11,432.5 | 7,528.9 | (23.3 | ) | (h) | 18,938.1 | ||||||||||||||
| Occupancy and other costs | 1,274.4 | 1,343.1 | — | 2,617.5 | ||||||||||||||||
| Real estate and other repositioning costs | 57.8 | (5.0 | ) | — | 52.8 | |||||||||||||||
| Loss on disposition of subsidiary | — | 64.2 | — | 64.2 | ||||||||||||||||
| Costs of services | 12,764.7 | 8,931.2 | (23.3 | ) | 21,672.6 | |||||||||||||||
| Selling, general and administrative expenses | 408.1 | 130.5 | 165.0 | (d) | 728.7 | |||||||||||||||
| 25.1 | (h) | |||||||||||||||||||
| Depreciation and amortization | 241.7 | 258.9 | 285.9 | (e) | 786.5 | |||||||||||||||
| Impairment of goodwill | 232.1 | 232.1 | ||||||||||||||||||
| Total operating expenses | 13,414.5 | 9,552.7 | 452.6 | 23,419.9 | ||||||||||||||||
| OPERATING INCOME | 2,274.6 | 1,139.0 | (452.6 | ) | 2,960.9 | |||||||||||||||
| Interest expense | 247.9 | 229.9 | 12.6 | (j) | 490.4 | |||||||||||||||
| Interest and other income, net | 100.9 | 140.0 | — | 240.9 | ||||||||||||||||
| INCOME BEFORE INCOME TAXES AND INCOME (LOSS) FROM EQUITY METHOD INVESTMENTS | 2,127.6 | 1,049.1 | (465.3 | ) | 2,711.4 | |||||||||||||||
| Income tax expense | 560.5 | 333.9 | (107.9 | ) | (k) | 786.5 | ||||||||||||||
| Income from equity method investments | 6.9 | 0.5 | — | 7.4 | ||||||||||||||||
| Net Income | $ | 1,574.0 | $ | 715.7 | $ | (357.3 | ) | $ | 1,932.4 | |||||||||||
| Net income attributed to noncontrolling interests | 93.4 | 26.2 | — | 119.6 | ||||||||||||||||
| NET INCOME ATTRIBUTED TO SHAREHOLDERS | $ | 1,480.6 | $ | 689.5 | $ | (357.3 | ) | $ | 1,812.8 | |||||||||||
| Earnings per share attributed to shareholders: | ||||||||||||||||||||
| Basic | $ | 7.54 | $ | 1.84 | $ | — | $ | 5.63 | ||||||||||||
| Dilutive | $ | 7.46 | $ | 1.83 | $ | — | $ | 5.59 | ||||||||||||
| Weighted average shares | ||||||||||||||||||||
| Basic | 196.4 | 375.2 | (249.4 | ) | (g) | 322.2 | ||||||||||||||
| Dilutive | 198.6 | 377.7 | (251.9 | ) | (g) | 324.4 | ||||||||||||||
Please refer to the notes to the unaudited pro forma condensed combined financial statements.
5
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
| 1. | Description of the Merger and Basis of Pro Forma Presentation |
On December 8, 2024, Omnicom Group, Inc. (“Omnicom”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Omnicom, EXT Subsidiary Inc., a direct wholly owned subsidiary of Omnicom (“Merger Sub”), and The Interpublic Group of Companies, Inc. (“IPG”), pursuant to which, subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into IPG (the “Merger”), with IPG surviving the Merger as a wholly owned subsidiary of Omnicom. Each share of IPG common stock will be converted into, and represent the right to receive, 0.344 shares of common stock of Omnicom, plus cash in lieu of any fractional shares of Omnicom common stock that otherwise would have been issued. On March 18, 2025, the shareholders of each of Omnicom and IPG approved the Merger. On June 23, 2025, Omnicom and IPG announced that the U.S. Federal Trade Commission had concluded its antitrust review of the Merger and reached agreement with Omnicom and IPG on a mutually acceptable consent order. The parties’ obligations to complete the Merger are conditioned upon (i) the receipt of remaining regulatory approvals and (ii) certain other customary closing conditions. The closing of the Merger is not subject to a financing condition or the completion of the Exchange Offers or Consent Solicitations announced by Omnicom and IPG on August 11, 2025 related to IPG’s outstanding senior notes (the “Exchange Offers and Consent Solicitations”).
The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined financial statements have been prepared from the respective historical consolidated financial statements of Omnicom and IPG and reflect transaction accounting adjustments related to the Merger. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2024 and for the six months ended June 30, 2025 have been presented as if the Merger had been completed on January 1, 2024. The unaudited pro forma condensed combined balance sheet as of June 30, 2025 has been presented as if the Merger had occurred on June 30, 2025.
Certain balance sheet and statements of income reclassifications have been made to the unaudited pro forma condensed combined financial statements in order to align historical presentation between Omnicom and IPG. Refer to Note 2 and Note 3 for a discussion of these reclassification adjustments.
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting, and Omnicom is considered the accounting acquirer. The acquisition method of accounting, based on ASC 805, uses the fair value concepts defined in ASC 820, Fair Value Measurement (“ASC 820”). Fair value is defined in ASC 820 as the “price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of an asset or liability. Market participants are assumed to be buyers or sellers in the most advantageous market for the asset or liability. Fair value measurement for an asset assumes the highest and best use by these market participants, and as a result, assets may be required to be recorded which are not intended to be used or sold and/or at a fair value measurement that does not reflect management’s intended use for those assets. Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances. ASC 805 requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at fair value as of the Merger date, with any excess purchase price allocated to goodwill.
As of August 11, 2025, the accompanying unaudited estimated purchase price allocation is preliminary and is subject to further adjustments as additional information becomes available and as additional analyses are performed. The potential changes to the purchase price allocation and related pro forma adjustments could be material.
6
For the purposes of preparing the unaudited pro forma condensed combined financial statements, Omnicom’s management has conducted a preliminary analysis of the adjustments required to conform IPG’s financial statements to reflect the current accounting policies of Omnicom. This assessment is ongoing, and, at the time of preparing the unaudited pro forma condensed combined financial statements, management is not aware of any material accounting policy differences. Upon consummation of the Merger, Omnicom management will conduct a final review of IPG’s accounting policies to determine if differences in accounting policies or financial statement classification exist that may require adjustments to or reclassification of IPG’s results of operations, assets or liabilities to conform to Omnicom’s accounting policies and classifications. As a result of that review, differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial statements.
| 2. | Summary of Reclassification Adjustments – Balance Sheet |
The classification of certain balance sheet items presented by IPG under U.S generally accepted accounting principles (“GAAP”) has been adjusted to align with the presentation used by Omnicom under GAAP, as shown below.
| June 30, 2025 | ||||||||||||
IPG Historical | Reclassification Adjustments | IPG Reclassified | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,564.4 | $ | — | 1,564.4 | |||||||
| Accounts receivable, net of allowance for doubtful accounts | 4,850.7 | — | 4,850.7 | |||||||||
| Work in process | — | 2,103.0 | 2,103.0 | |||||||||
| Accounts receivable, billable to clients | 2,103.0 | (2,103.0 | ) | — | ||||||||
| Prepaid expenses | 702.6 | (702.6 | ) | — | ||||||||
| Assets held for sale | 1.8 | — | 1.8 | |||||||||
| Other current assets | 78.6 | 702.6 | 781.2 | |||||||||
| Total current assets | 9,301.1 | — | 9,301.1 | |||||||||
| Property and equipment at cost, less accumulated depreciation | 529.2 | (189.6 | ) | 339.6 | ||||||||
| Deferred income taxes | 299.7 | (299.7 | ) | — | ||||||||
| Operating lease right-of-use assets | 891.8 | — | 891.8 | |||||||||
| Equity method investments | — | 44.4 | 44.4 | |||||||||
| Goodwill | 4,798.1 | — | 4,798.1 | |||||||||
| Intangible assets, net of accumulated amortization | 646.2 | 189.6 | 835.8 | |||||||||
| Other assets | 561.0 | 255.3 | 816.3 | |||||||||
| TOTAL ASSETS | $ | 17,027.1 | $ | — | $ | 17,027.1 | ||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 7,185.9 | $ | — | $ | 7,185.9 | ||||||
| Accrued liabilities | 580.0 | (580.0 | ) | — | ||||||||
| Customer advances | — | 654.9 | 654.9 | |||||||||
| Contract liabilities | 654.9 | (654.9 | ) | — | ||||||||
| Current portion of debt | 0.1 | — | 0.1 | |||||||||
| Short-term debt | 37.6 | — | 37.6 | |||||||||
| Current portion of operating leases | 247.9 | (247.9 | ) | — | ||||||||
| Other current liabilities | — | 827.9 | 827.9 | |||||||||
| Total current liabilities | 8,706.4 | — | 8,706.4 | |||||||||
| Long-term liabilities | 449.5 | 41.1 | 490.6 | |||||||||
| Deferred compensation | 187.1 | (187.1 | ) | — | ||||||||
| Long-term liability - operating leases | 977.0 | — | 977.0 | |||||||||
| Long-term debt | 2,922.1 | — | 2,922.1 | |||||||||
| Deferred tax liabilities | — | 146.0 | 146.0 | |||||||||
| Commitments and contingent liabilities | ||||||||||||
| Temporary equity - redeemable noncontrolling interests | 20.0 | — | 20.0 | |||||||||
| Equity | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Preferred stock | — | — | — | |||||||||
| Common stock | 37.4 | — | 37.4 | |||||||||
| Additional paid-in capital | 460.0 | — | 460.0 | |||||||||
| Retained earnings | 4,294.3 | — | 4,294.3 | |||||||||
| Accumulated other comprehensive income (loss) | (889.5 | ) | — | (889.5 | ) | |||||||
| Treasury stock, at cost | (189.8 | ) | — | (189.8 | ) | |||||||
| Total shareholders’ equity | 3,712.4 | — | 3,712.4 | |||||||||
| Noncontrolling interests | 52.6 | — | 52.6 | |||||||||
| Total equity | 3,765.0 | — | 3,765.0 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 17,027.1 | $ | — | $ | 17,027.1 | ||||||
7
| 3. | Summary of Reclassification Adjustments – Statement of Income |
The classification of certain items in the statement of income presented by IPG under GAAP has been adjusted to align with the presentation used by Omnicom under GAAP, as shown below.
| Six Months Ended June 30, 2025 | ||||||||||||
IPG Historical | Presentation Adjustments | IPG Reclassified | ||||||||||
| Revenue | $ | — | $ | 4,859.4 | $ | 4,859.4 | ||||||
| Revenue before billable expenses | $ | 4,169.0 | $ | (4,169.0 | ) | |||||||
| Billable expenses | $ | 690.4 | $ | (690.4 | ) | |||||||
| Operating expenses: | ||||||||||||
| Salary and service costs | 2,792.6 | 690.4 | 3,483.0 | |||||||||
| Occupancy and other costs | 644.4 | — | 644.4 | |||||||||
| Real estate and other repositioning costs | — | 321.3 | 321.3 | |||||||||
| Loss on disposition of subsidiary | — | 34.5 | 34.5 | |||||||||
| Billable expenses | 690.4 | (690.4 | ) | — | ||||||||
| Costs of services | 4,127.4 | 355.8 | 4,483.2 | |||||||||
| Selling, general and administrative expenses | 86.8 | — | 86.8 | |||||||||
| Depreciation and amortization | 122.2 | — | 122.2 | |||||||||
| Restructuring | 321.3 | (321.3 | ) | — | ||||||||
| Total operating expenses | 4,657.7 | 34.5 | 4,692.2 | |||||||||
| OPERATING INCOME | 201.7 | (34.5 | ) | 167.2 | ||||||||
| Interest expense | 100.6 | — | 100.6 | |||||||||
| Interest income | 60.8 | (3.8 | ) | 57.0 | ||||||||
| Other expenses, net | (38.3 | ) | 38.3 | — | ||||||||
| INCOME BEFORE INCOME TAXES AND INCOME FROM EQUITY METHOD INVESTMENTS | 123.6 | — | 123.6 | |||||||||
| Income tax expense | 45.4 | — | 45.4 | |||||||||
| Income from equity method investments | 0.1 | — | 0.1 | |||||||||
| Net income | $ | 78.3 | $ | — | $ | 78.3 | ||||||
| Net income attributed to noncontrolling interests | 1.2 | — | 1.2 | |||||||||
| NET INCOME ATTRIBUTED TO SHAREHOLDERS | $ | 77.1 | $ | — | $ | 77.1 | ||||||
| Earnings per share attributed to shareholders: | ||||||||||||
| Basic | $ | 0.21 | $ | — | $ | 0.21 | ||||||
| Dilutive | $ | 0.21 | $ | — | $ | 0.21 | ||||||
| Weighted average shares | ||||||||||||
| Basic | 370.2 | — | 370.2 | |||||||||
| Dilutive | 372.5 | — | 372.5 | |||||||||
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| Year Ended December 31, 2024 | ||||||||||||
IPG Historical | Presentation Adjustments | IPG Reclassified | ||||||||||
| Revenue | $ | — | $ | 10,691.7 | $ | 10,691.7 | ||||||
| Revenue before billable expenses | $ | 9,187.6 | $ | (9,187.6 | ) | |||||||
| Billable expenses | $ | 1,504.1 | $ | (1,504.1 | ) | |||||||
| Operating expenses: | ||||||||||||
| Salary and service costs | 6,024.8 | 1,504.1 | 7,528.9 | |||||||||
| Occupancy and other costs | 1,343.1 | — | 1,343.1 | |||||||||
| Real estate and other repositioning costs | — | (5.0 | ) | (5.0 | ) | |||||||
| Loss on disposition of subsidiary | — | 64.2 | 64.2 | |||||||||
| Billable expenses | 1,504.1 | (1,504.1 | ) | — | ||||||||
| Costs of services | 8,872.0 | 59.2 | 8,931.2 | |||||||||
| Selling, general and administrative expenses | 130.5 | — | 130.5 | |||||||||
| Depreciation and amortization | 258.9 | — | 258.9 | |||||||||
| Impairment of goodwill | 232.1 | — | 232.1 | |||||||||
| Restructuring | (5.0 | ) | 5.0 | — | ||||||||
| Total operating expenses | 9,488.5 | 64.2 | 9,552.7 | |||||||||
| OPERATING INCOME | 1,203.2 | (64.2 | ) | 1,139.0 | ||||||||
| Interest expense | 229.9 | — | 229.9 | |||||||||
| Interest income | 151.7 | (11.7 | ) | 140.0 | ||||||||
| Other expenses, net | (75.9 | ) | 75.9 | — | ||||||||
| INCOME BEFORE INCOME TAXES AND INCOME FROM EQUITY METHOD INVESTMENTS | 1,049.1 | — | 1,049.1 | |||||||||
| Income tax expense | 333.9 | — | 333.9 | |||||||||
| Income from equity method investments | 0.5 | — | 0.5 | |||||||||
| Net income | $ | 715.7 | $ | — | $ | 715.7 | ||||||
| Net income attributed to noncontrolling interests | 26.2 | — | 26.2 | |||||||||
| NET INCOME ATTRIBUTED TO SHAREHOLDERS | $ | 689.5 | $ | — | $ | 689.5 | ||||||
| Earnings per share attributed to shareholders: | ||||||||||||
| Basic | $ | 1.84 | $ | — | $ | 1.84 | ||||||
| Dilutive | $ | 1.83 | $ | — | $ | 1.83 | ||||||
| Weighted average shares | — | |||||||||||
| Basic | 375.2 | — | 375.2 | |||||||||
| Dilutive | 377.7 | — | 377.7 | |||||||||
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| 4. | Consideration |
Omnicom calculated the total consideration as follows (in millions, except for shares, per share amounts and exchange ratio):
| Shares of IPG common stock outstanding1 | 365,781,784 | |||
| Exchange ratio | 0.344 | |||
| Shares of Omnicom common stock to be issued | 125,828,934 | |||
| Omnicom share price2 | $ | 71.11 | ||
| Total equity consideration | $ | 8,947.7 | ||
| Value of unvested replacement awards3 | $ | 133.6 | ||
| Total Consideration4 | $ | 9,081.3 |
| 1 | Shares of IPG common stock outstanding as of August 1, 2025. |
| 2 | Omnicom share price is as of the close of business August 1, 2025. The actual value of the shares of Omnicom common stock to be issued in the Merger will depend on the market price of shares of Omnicom common stock at the closing date of the Merger, and therefore the actual consideration will fluctuate based on the market price of the shares of Omnicom common stock. Accordingly, the final consideration could differ significantly from the current estimate. A 10% increase or decrease in Omnicom’s share price would increase or decrease the consideration by approximately $894.8 million and impact goodwill by a corresponding amount. |
| 3 | Represents the historical share-based awards that will be replaced and cash settled by Omnicom. Refer to (i) in Note 5 below. |
| 4 | Consideration paid for fractional shares is immaterial. |
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Under the acquisition method of accounting, the total consideration is allocated to IPG’s assets and liabilities based upon their estimated fair values as of the date of completion of the Merger. Based upon the estimated purchase price and a preliminary valuation, the preliminary purchase price allocation is as follows:
Preliminary purchase price allocation | As of June 30, 2025 | |||
| Cash and cash equivalents | $ | 1,564.4 | ||
| Accounts receivable | 4,850.7 | |||
| Work in process | 2,103.0 | |||
| Assets held for sale | 1.8 | |||
| Other current assets | 781.2 | |||
| Property and Equipment | 339.6 | |||
| Operating lease right-of-use assets | 891.8 | |||
| Equity method investments | 44.4 | |||
| Goodwill | 7,374.7 | |||
| Intangible assets | 4,119.4 | |||
| Other assets | 787.3 | |||
| Total assets | $ | 22,858.4 | ||
| Accounts payable | $ | 7,185.9 | ||
| Customer advances | 654.9 | |||
| Current portion of debt | 0.1 | |||
| Short-term debt | 37.6 | |||
| Other current liabilities | 827.9 | |||
| Long-term liabilities | 490.6 | |||
| Long-term liability - operating leases | 977.0 | |||
| Long-term debt | 2,750.3 | |||
| Deferred tax liabilities | 780.2 | |||
| Non-controlling interests | 52.6 | |||
| Redeemable noncontrolling interests | 20.0 | |||
| Total liabilities and noncontrolling interests | $ | 13,777.1 | ||
| Total Consideration | $ | 9,081.3 | ||
The purchase price estimates and the purchase price allocation are preliminary and are subject to change based on the Omnicom share price at the closing date of the Merger, as well as the actual net tangible and intangible assets and liabilities that exist on the closing date of the Merger, and the value of certain tax contingencies. The purchase price allocation related to certain tangible and intangible assets and liabilities is ongoing. This includes, but is not limited to, items such as property and equipment, operating lease right-of-use assets and lease liabilities, and redeemable noncontrolling interests. The final determination of the purchase price allocation will be completed as soon as practicable after the completion of the Merger and will be based on the fair values of the assets acquired and liabilities assumed. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.
Refer to Note 5 for additional information on how the consideration and purchase price allocation have been reflected in the pro forma adjustments.
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| 5. | Pro Forma Adjustments |
The unaudited pro forma condensed combined financial statements reflects the following adjustments.
| (a) | Acquisition of all outstanding shares of IPG common stock. |
| As of June 30, 2025 | ||||
| Shares of Omnicom issued to IPG stockholders (Common stock) | $ | 18.9 | ||
| Shares of Omnicom issued to IPG stockholders (Additional paid-in capital) | 8,928.8 | |||
| Total equity consideration | $ | 8,947.7 | ||
| (b) | Purchase price allocation (the amounts below represent changes; refer to Note 4 for preliminary fair value estimates). The adjustments as a result of the purchase price allocation include the recognition of new intangible assets, net of the removal of historical intangible assets, the recognition of new goodwill, net of the removal of historical goodwill, adjustment to the fair value of the debt, and adjustment to the fair value of deferred taxes to reflect the after tax basis difference of the intangible assets. |
| As of June 30, 2025 | ||||
| Intangible assets1 | 3,283.7 | |||
| Goodwill | 2,576.6 | |||
| Debt | (171.8 | ) | ||
| Deferred income taxes2 | 569.2 | |||
| 1 | The identifiable intangible assets acquired consist of trade names, customer relationships and technology with estimated fair values of $973.0 million , $2,886.0 million and $260.4 million, respectively. Trade names, customer relationships and technology are amortized straight-line over estimated remaining useful lives of 15 years, 10 years and 5 years, respectively. The fair values for intangible assets were estimated using a market participant approach. The fair values for trade names were estimated by applying the relief-from-royalty method under the income approach. The fair values for customer relationships were estimated using the profit contribution method under the income approach. The fair values for the technology intangible assets were estimated based on the historical book value of the similar assets. The final purchase price allocation for intangible assets could materially differ from the estimates. A ten percent increase in the value of the acquired intangible assets would increase the intangible assets by $411.9 million and result in a corresponding increase to amortization expense of $78.5 million. |
| 2 | Deferred income taxes were adjusted to include deferred tax liabilities related to the identified intangible assets that will be amortized. In addition, estimates were made to deferred taxes related to net operating losses that may not be utilized and withholding taxes on undistributed earnings of foreign subsidiaries that may be required in certain jurisdictions of the combined entities (see (f) below). |
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| (c) | Reflects adjustments to equity related to: |
| i) | eliminate IPG historical equity of $3,712.4 million; and |
| ii) | give effect to the transaction costs adjustment of $165.0 million described in (d) to retained earnings. |
| As of June 30, 2025 | ||||
| Common stock | $ | (37.4 | ) | |
| Additional paid-in capital | (460.0 | ) | ||
| Retained earnings | (4,459.3 | ) | ||
| Accumulated other comprehensive income (loss) | 889.5 | |||
| Treasury stock, at cost | 189.8 | |||
| Total | $ | (3,877.4 | ) | |
| (d) | Represents the accrual of direct and incremental transaction costs expected to be incurred after June 30, 2025, in connection with the closing of the Merger, which are non-recurring. The estimate is based on Omnicom management’s judgment after evaluating several factors, including evaluating its most recent overall expected budget for transaction costs and amounts contractually due to external advisors and service providers. These costs will not affect Omnicom’s income statement beyond 12 months after the acquisition date and costs related to future integration activities are not reflected. The historical income statements of Omnicom include acquisition related costs of $114.5 million ($14.8 million for the year ended December 31, 2024 and $99.8 million for the six months ended June 30, 2025). |
| Year Ended December 31, 2024 | Six Months Ended June 30, 2025 | |||||||
| Acquisition-related costs | 165.0 | — | ||||||
| (e) | Incremental amortization resulting from the preliminary allocation of purchase price. |
| Year Ended December 31, 2024 | Six Months Ended June 30, 2025 | |||||||
| Incremental amortization | 285.9 | 142.4 | ||||||
| (f) | Adjust the deferred tax liabilities and deferred tax assets as a result of the Merger. An increase to deferred tax liabilities was recorded as part of the allocation of purchase price in adjustment (b) above. The income tax effects related to the increase of the acquiree’s net operating loss valuation allowance and the taxes recognized on undistributed earnings of foreign subsidiaries are also presented as adjustments to purchase accounting. |
| As of June 30, 2025 | ||||
| Incremental valuation allowance | (29.0 | ) | ||
| Incremental withholding tax accruals | 65.0 | |||
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| (g) | Adjusts the common shares outstanding to reflect the Omnicom common stock that will be issued as stock consideration and the removal of IPG’s shares. |
| Year Ended December 31, 2024 | Six Months Ended June 30, 2025 | |||||||
| Weighted Average Shares - Basic | ||||||||
| Omnicom shares issued | 125.8 | 125.8 | ||||||
| IPG shares converted | (375.2 | ) | (370.2 | ) | ||||
| Total | (249.4 | ) | (244.4 | ) | ||||
| Weighted Average Shares - Diluted | ||||||||
| Omnicom shares issued | 125.8 | 125.8 | ||||||
| IPG shares converted | (377.7 | ) | (372.5 | ) | ||||
| Total | (251.9 | ) | (246.7 | ) | ||||
| (h) | Reflects the adjustments to previously recorded expense for incentive compensation plans that included, performance and restricted share-based awards and cash performance-based awards granted to certain IPG employees and executives and IPG’s Board of Directors. This reflects the awards that are unvested at the Merger closing date and assumes no grant will be made after the Merger closing date. The share-based awards of IPG will be replaced with cash-based awards as of the closing date and have been reflected at the estimated replacement award for share-based awards using the estimated IPG share price at closing. The expense for any awards with a remaining service period after the closing date has been included in the unaudited pro forma condensed combined financial statements. IPG cash-based and share-based awards include a change of control provision that requires payment upon both a change of control event and subsequent termination (double trigger). Adjustments have been made for certain awards that had a double trigger which accelerated the vesting. Where no determination has been made in relation to the double trigger and whether both criteria requiring payment upon a change in control would be satisfied, no acceleration has been made. |
The adjustment below reflects the impact to selling, general and administrative expenses (SG&A) for those employees whose compensation expense was included within SG&A and Salary and related for those employees included within Salary and related. The following reflects the previously recorded income statement impacts and the adjusted income statement impacts for each period presented.
| Year Ended December 31, 2024 | Six Months Ended June 30, 2025 | |||||||
| Previously recognized IPG incentive compensation plan expense | 101.0 | 40.6 | ||||||
| Pro forma adjustment to SG&A | 25.1 | (1.4 | ) | |||||
| Pro forma adjustment to Salary and related expenses | (23.3 | ) | (12.3 | ) | ||||
| Incentive compensation plan expense included above | 102.8 | 26.9 | ||||||
| (i) | Reflects the accrual for share-based awards that will all be cash settled after completion of the Merger. The amount represents the portion of the service period that has been completed as of the Merger closing date. |
| As of June 30, 2025 | ||||
| Accrual for incentive compensation plans - current liability | 81.2 | |||
| Accrual for incentive compensation plans - long-term liability | 52.4 | |||
| (j) | Reflects the increase in interest expense for the fair value adjustment of the debt. |
| Year Ended December 31, 2024 | Six Months Ended June 30, 2025 | |||||||
| Interest expense | 12.6 | 6.3 | ||||||
| (k) | Reflects the approximate income tax effects of the pro forma adjustments at the blended statutory rate of 23.2% for the year ended December 31, 2024 and the six months ended June 30, 2025. |
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