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Leading communications firms Ketchum, a division of Omnicom Group Inc. (OMC - Analyst Report), recently announced a merger with InComm Brodeur for an undisclosed amount. The acquired firm will merge with Omnicom and will be renamed immediately as Ketchum. This ‘market-extension merger’ is expected to benefit both the companies. The move is a strategic fit as it will extend Ketchum’s reach to the South Korean market ahead of the 2018 Olympics.

The Acquiree

South Korea-based InComm primarily provides communications consulting including public relations, advertising, event management and online public relations and database marketing. Apart from being a leading domestic player, the firm operates globally, serving widespread industries such as information technology, consumer technology, healthcare, financial services, public affairs and consumer.

The Acquirer

Ketchum, the winner of 11 Cannes Lions awards, has operations in more than 70 countries. Ketchum helps its clients to build strong brands and reputation through its creative ideas and strategies. The company is part of Omnicom’s Diversified Agency Services (DAS) division.

The Key Takeaways of the Merger

The merger seems to be part of Ketchum’s ongoing efforts to expand its footprint in the Asia Pacific region. The company has lately strengthened its presence in China by setting up business operations and is moving a majority of the business positions to the Greater China Region. It has also recently completed the acquisition of a leading India-based agency – Sampark – to expand its global footprint.

Synergies

With the deal, Ketchum will gain access to the South Korean market, which will boost its relationship with its existing clients, many of whom have business operations in the country. Moreover, the merger will help in attracting new clients in the South East Asian country leveraging local market insight and expertise.

On the other hand, the merger will enable InComm to spread wings beyond its domestic territory. InComm will be able to access Ketchum’s resources to enhance its business and offer clients a wider range of services. Moreover, InComm’s merger with one of the top firms in the world will facilitate in providing global solutions to its existing customers.

Bottomline

The merger seems to be a strategic fit, given the economic benefits for both the companies. Moreover, Ketchum and InComm share the same goals and social values, which will enable them to work collectively and impact a positive change. Both the companies believe in delivering research and insight-based creative solutions to clients to help them grow their businesses.

The deal is another step by Ketchum to exploit the rising business opportunities in the Asia Pacific market. Notably, the company already has a presence in countries like Australia, Singapore, Indonesia, Japan and Pakistan. 

Omnicom, the parent company of Ketchum, is a advertising, marketing and corporate communications bellwether. The company has a strong track record of winning new clients and receiving additional deals from the existing ones. The company’s business mix is well-diversified geographically and benefits largely from the growing markets. In addition, the company’s efforts to control expenses and its global reputation are commendable.

Omnicom currently has a Zacks Rank #3 (Hold). Better-placed stocks in the same sector worth considering include WPP plc (WPPGY - Analyst Report), Corporate Executive Board Co. (CEB - Snapshot Report) and MDC Partners Inc. (MDCA - Snapshot Report). While WPP and Corporate Executive Board both carry a Zacks Rank #2 (Buy), MDC Partners has a Zacks Rank #1 (Strong Buy).

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