(Reuters) - Omnicom Group has struck a $13.25 billion all-stock deal to buy rival Interpublic Group creating the world's largest advertising agency as traditional players look to better compete with Big Tech firms amid accelerating use of AI.

The deal, announced on Monday, could attract regulatory scrutiny as it seeks to merge the world's third-largest ad buyer, Omnicom, with the fourth-largest - Interpublic.

Interpublic investors will receive 0.344 Omnicom shares for each share held, or $35.58 based on Omnicom's last close. This represents a premium of 21.6% to Interpublic's close on Friday.
Interpublic's shares, down more than 10% this year, were up nearly 11% in early trading. Omnicom fell 6%.

"We are pretty confident this is not going to create any regulatory issues. The world isn't divided into four companies - you have things like Google, Facebook, Amazon... servicing people's marketing needs," Omnicom CEO John Wren said on a call with analysts.

"Also, there's reason to believe that the change in administration (in the U.S.) will make it more friendly to business."

Omnicom owns brands such as BBDO and TBWA, while Interpublic owns McCann, Weber Shandwick and Mediabrands. Both companies are based in New York.

Wren will lead the new company, while Interpublic boss Philippe Krakowsky will serve as co-Chief Operating Officer along with Daryl Simm.

COMPETITION FOR AD DOLLARS

Tech giants such as Alphabet-owned Google and Amazon have in recent years attracted marketing dollars away from traditional agencies by offering both advertising tools and marketplaces to buy and sell them.

Soaring use of AI tools that allow businesses to create ads cheaper and faster has squeezed traditional agencies, forcing them to scramble to develop similar in-house tools to retain clients.

"This move allows us to take control of our own future rather than wait for technology to impact it in ways that you can't anticipate today," Wren said.

Apple, Chanel, Disney and Volkswagen are among Omnicom's customers, while Interpublic's client roster includes Johnson & Johnson, Levi Strauss, and Barbie maker Mattel.

"An integration of this size would be unprecedented and likely challenging," said MoffettNathanson analyst Michael Nathanson.

Omnicom shareholders will own 60.6% of the combined company. The deal is expected to close in the second half of 2025 and generate annual cost savings of $750 million.