OMNICOM PRICES $600 MILLION SENIOR NOTES OFFERING

Rhea-AI Summary

Omnicom (NYSE: OMC) has announced the pricing of its public offering of $600 million aggregate principal amount of 5.300% Senior Notes due 2034. The Notes, set to mature on November 1, 2034, will bear interest at a rate of 5.300% per annum and will be unsecured and unsubordinated obligations of Omnicom. The transaction is expected to close on August 2, 2024.

The company intends to use the net proceeds, along with available cash, to repay its 3.65% Senior Notes due 2024, of which $750 million was outstanding as of June 30, 2024. BofA Securities, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and Wells Fargo Securities, are acting as joint book-running managers for the offering.

Positive

• Successful pricing of $600 million Senior Notes offering
• Refinancing of existing debt with new notes at 5.300% interest rate
• Strong financial position allowing for debt management

Negative

• Increase in interest rate from 3.65% to 5.300% on refinanced debt

Financial Analyst

Omnicom's $600 million senior notes offering is a significant financial move that warrants attention. The 5.300% interest rate for these 10-year notes, maturing in 2034, reflects current market conditions and Omnicom's credit standing. This rate is notably higher than the 3.65% on the maturing notes, indicating a shift in the interest rate environment since the previous issuance.

The company's strategy to use the proceeds, along with available cash, to repay the $750 million in maturing notes demonstrates prudent debt management. This refinancing approach allows Omnicom to extend its debt maturity profile, potentially providing more financial flexibility in the coming years. However, the higher interest rate will increase the company's interest expenses, which could impact profitability margins.

It's worth noting that Omnicom is tapping into the bond market at a time when interest rates are relatively high. This suggests that the company may be anticipating even higher rates in the future or sees an immediate need to secure long-term financing. The unsecured and unsubordinated status of these notes indicates confidence in Omnicom's financial stability from both the company and underwriters.

For investors, this offering presents a mixed picture. On one hand, it showcases Omnicom's ability to access capital markets and manage its debt effectively. On the other, the higher interest rate could be a drag on future earnings. Shareholders should monitor how this increased cost of debt affects Omnicom's financial performance and capital allocation strategies in the coming quarters.

Market Research Analyst

Omnicom's decision to issue new senior notes provides insights into both the company's strategy and broader market trends. The 5.300% coupon rate on the new notes is telling. It's substantially higher than the 3.65% rate on the maturing notes, reflecting the overall rise in interest rates we've seen in recent years. This higher rate could signal expectations of continued elevated rates in the medium term.

The timing of this offering is intriguing. By moving now, Omnicom is proactively addressing its upcoming debt maturity well in advance. This could be interpreted as a cautious approach, possibly driven by uncertainties in the advertising and media landscape. The global economic outlook remains mixed and advertising spending often correlates with broader economic trends.

It's also worth considering the $600 million size of the offering compared to the $750 million in maturing notes. The $150 million difference suggests Omnicom may be using this opportunity to slightly deleverage, which could be viewed positively by the market. However, it also raises questions about the company's cash position and future capital needs.

The involvement of major financial institutions as joint book-running managers underscores the credibility of this offering. Their participation suggests confidence in Omnicom's financial health and market position. For investors, this offering provides a glimpse into how large corporations are navigating the current high-interest rate environment and managing their long-term financial obligations.

NEW YORK, July 30, 2024 /PRNewswire/ -- Omnicom (NYSE: OMC) today announced the pricing of its public offering of $600 million aggregate principal amount of 5.300% Senior Notes due 2034 (the "Notes"). The Notes will mature on November 1, 2034. The transaction is expected to close on August 2, 2024, subject to the satisfaction of customary closing conditions. The Notes will not be listed on any securities exchange or included in any automated quotation system.

The Notes will bear interest at a rate of 5.300 percent per annum. The Notes will be the unsecured and unsubordinated obligations of Omnicom and will rank equal in right of payment to all its existing and future unsecured senior indebtedness.

Omnicom intends to use the net proceeds from the offering, along with available cash, to fund the repayment of its 3.65% Senior Notes due 2024 co-issued with Omnicom Capital Inc., which mature on November 1, 2024, of which $750 million aggregate principal amount was outstanding as of June 30, 2024.

BofA Securities, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC are acting as joint book-running managers for the offering.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer, solicitation or sale in such jurisdiction. The public offering is being made pursuant to an effective shelf registration statement that has been filed with the Securities and Exchange Commission ("SEC"). A final prospectus supplement related to the offering will be filed with the SEC and will be available on the SEC's website at http://www.sec.gov. In addition, copies of the prospectus and prospectus supplement relating to the Notes offered in the offering may be obtained by contacting any of the following underwriters: BofA Securities, Inc. at 1-800-294-1322, Citigroup Global Markets Inc. at 1-800-831-9146, Deutsche Bank Securities Inc. at 1-800-503-4611 or Wells Fargo Securities, LLC at 1-800-645-3751.

About Omnicom
Omnicom (NYSE: OMC) is a leading provider of data-inspired, creative marketing and sales solutions. Omnicom's iconic agency brands are home to the industry's most innovative communications specialists who are focused on driving intelligent business outcomes for their clients. The company offers a wide range of services in advertising, strategic media planning and buying, precision marketing, retail and digital commerce, branding, experiential, public relations, healthcare marketing and other specialty marketing services to over 5,000 clients in more than 70 countries. For more information, visit www.omnicomgroup.com.

Forward-Looking Statements
Certain statements in this document contain forward-looking statements, including statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, the Company or its representatives have made, or may make, forward-looking statements, orally or in writing. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial position, or otherwise, based on current beliefs of the Company's management as well as assumptions made by, and information currently available to, the Company's management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "should," "would," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include: adverse economic conditions, including those caused by geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues affecting the distribution of our clients' products; international, national, or local economic conditions that could adversely affect the Company or its clients; losses on media purchases and production costs incurred on behalf of clients; reductions in client spending, a slowdown in client payments, and a deterioration or disruption in the credit markets; the ability to attract new clients and retain existing clients in the manner anticipated; changes in client advertising, marketing, and corporate communications requirements; failure to manage potential conflicts of interest between or among clients; unanticipated changes related to competitive factors in the advertising, marketing, and corporate communications industries; unanticipated changes to, or the ability to hire and retain key personnel; currency exchange rate fluctuations; reliance on information technology systems and risks related to cybersecurity incidents; effective management of the risks, challenges and efficiencies presented by utilizing Artificial Intelligence (AI) technologies and related partnerships in our business; changes in legislation or governmental regulations affecting the Company or its clients; risks associated with assumptions the Company makes in connection with acquisitions, its critical accounting estimates and legal proceedings; the Company's international operations, which are subject to the risks of currency repatriation restrictions, social or political conditions, and an evolving regulatory environment in high-growth markets and developing countries; and risks related to our environmental, social, and governance goals and initiatives, including impacts from regulators and other stakeholders, and the impact of factors outside of our control on such goals and initiatives. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company's business, including those described in Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents filed from time to time with the Securities and Exchange Commission. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

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SOURCE Omnicom Group Inc.

FAQ

What is the size and interest rate of Omnicom's (OMC) new Senior Notes offering?

Omnicom (OMC) has priced a $600 million aggregate principal amount of Senior Notes due 2034, bearing an interest rate of 5.300% per annum.

When will Omnicom's (OMC) newly issued Senior Notes mature?

The Senior Notes issued by Omnicom (OMC) are set to mature on November 1, 2034.

How does Omnicom (OMC) plan to use the proceeds from its new Senior Notes offering?

Omnicom (OMC) intends to use the net proceeds, along with available cash, to repay its 3.65% Senior Notes due 2024, of which $750 million was outstanding as of June 30, 2024.

Which financial institutions are managing Omnicom's (OMC) Senior Notes offering?

BofA Securities, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and Wells Fargo Securities, are acting as joint book-running managers for Omnicom's (OMC) Senior Notes offering.