Elliott Management, a hedge fund, headed by activist investor Paul Singer, is now one of the major shareholders of Interpublic Group of Companies Inc (NYSE:IPG), one of the largest advertising and marketing services companies worldwide.
Details of Elliott’s investment
In a regulatory filing with the Securities and Exchange Commission (SEC), Elliott and its affiliates, Elliott International and Elliott International Capital Advisors (EICA) collectively disclosed a 6.7% stake in Interpublic Group of Companies Inc (NYSE:IPG).
As of July 23, Elliott beneficially owned 5,582,498 shares of the common stock of the advertising and marketing services company including 3,675 shares of common stock underlying options that are exercisable within 60 days. Its stake represents 1.3% of the outstanding common stock of Interpublic Group of Companies Inc (NYSE:IPG).
Elliott International beneficially owns 10,367,502 shares of the common stock of International Group of Companies Inc (NYSELIPG) including 6,825,000 shares underlying options exercisable within 60 days. Its stake accounts 2.5%. The filing also indicated that EICA as investment manager of Elliott International may be deemed beneficially own the 10,367,502 shares or 2.5% stake in the advertising and marketing services company.
The filing also stated that Elliot and its affiliates collectively owns 15,950,000 shares of common stock including 10,500,000 shares underlying options exercisable within 60 days, which represent 3.8% of the outstanding common stock of Interpublic Group of Companies Inc (NYSE:IPG).
Collectively, Elliot has an economic exposure of approximately 3% of the shares of the common stock of the advertising and marketing services company based on derivative agreements.
Purpose of the transaction
Elliott and its affiliates believed that the shares of Interpublic Group of Companies Inc (NYSE:IPG) are undervalued and represent an attractive investment opportunity. The hedge fund also indicated its intention to engage in a constructive dialogue with the board of directors of Interpublic Group to maximize shareholder value.
Interpublic Group of Companies Inc (NYSE:IPG) is the fourth-largest advertising holding company in terms of revenue. The company owns nearly 100 advertising firms including McCann Worldgroup, IPG Mediabrands, Weber Shandwick among others. Some of its biggest clients include The Coca-Cola Company (NYSE:KO), General Motors Company (NYSE:GM), Unilever N.V. (ADR) (NYSE:UV) and Johnson & Johnson (NYSE:JNJ).
Interpublic Group’s financial performance
Some of the largest advertising firms of Interpublic Group of Companies Inc (NYSE:IPG) have been delivering poor performance, which contributed to its failure to meet its margin targets over the past two years. Market observers believe that it is probably one of the reasons behind the intention of Elliott to shakeup Interpublic Group.
McCann Worldgroup, the largest advertising firm of Interpublic Group Companies Inc (NYSE:IPG) by revenue started to rebound under a new leadership. The firm added General Motors Company (NYSE:GM) and Microsoft Corporation (NASDAQ:MSFT) as clients, which helped boost the financial performance of its parent company.
Interpublic Group Companies Inc (NYSE:IPG) reported strong financial results for the second-quarter last Friday. The company reported that its organic revenue rose 7%.
