A proposed US$35bn merger deal between US group Omnicom Group and France’s Publicis, which would have created the world’s largest advertising agency, has been abandoned after the two agencies failed to agree on how to combine their corporate cultures.
The planned union was first announced last July, when it was described as a merger of equals that would enable Omnicom, the world’s second-largest advertising agency and Publicis, the third-largest, to compete more effectively in the digital arena. The combination would have created a group with a US$35bn market capitalisation that surpassed WPP, the world’s largest advertising company, in size
Publicis’ chief executive (CEO) Maurice Levy, speaking of his counterpart John Wren, told Reuters: “I have not been able to convince John that balance is balance.
“Omnicom wanted their people to fill the CEO, chief financial officer (CFO) and general counsel jobs. I thought that went too far. I was not ready to cede on this point.”
Other obstacles cited were Publicis’ complex tax structure and the respective groups’ divergent cultures. Reports suggest that they were also losing major work, amounting to over US$1.5 billion in the past month alone, and wanted to end the uncertainty.
Omnicom CEO Wren confirmed that the two sides had failed to find a way past the strong corporate cultures of each group. “There are a lot of complex issues we haven’t resolved. There are strong corporate cultures in both companies that delayed us for reaching an agreement,” he said.
“There was no clear finish line in sight, and uncertainty is never a good thing when you are in the personal service business.”
Analysts had also questioned whether a deal between the two would produce synergies, despite a promised US$500m in cost savings and a pledge of no job cuts. For many it was unclear why the two groups needed to merge, how they would do it successfully, and how it would benefit both clients and brands.
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