Advertising giant Interpublic Group (NYSE:IPG) is in discussion with India’s Tata Consultancy Services for the sale of its digital marketing agency R/GA to push growth, The Wall Street Journal reported.
The negotiations are ongoing, and R/GA could fetch ~$300M; however, the deal may still not follow through as both parties have not agreed on valuation, according to the report that cites people familiar with the matter.
R/GA has worked for brands like Samsung, Verizon, Google’s Android, Coca-Cola, and Nike. R/GA became a part of IPG (IPG) in 2001, when it acquired R/GA’s parent, True North Communications.
R/GA witnessed executive turnover and client losses, and its revenue dropped by roughly 20% to ~$200M last year. The talks with TCS are likely to help IPG (IPG) streamline its business amidst stiff competition on Madison Avenue.
IPG (IPG) and TCS are also in discussions to build a larger strategic partnership for shared clients in the AI or data space.
With this move, TCS joins other consulting firms like Accenture (ACN) and Deloitte that have enhanced marketing capabilities by acquiring firms that specialize in digital transformation, experiential marketing, creative services, and web and mobile development skills.
IPG (IPG) stock price dropped ~10.7% YTD to $29.15, gets a Wall St. Rating of Buy with a target price of $35.63 and a Seeking Alpha Quant rating of Hold.