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Omnicom Publicis Groupe mega merger collapses Omnicom Publicis Groupe mega merger collapses
(about 4 hours later)
The $35 billion merger between Omnicom and Publicis Groupe SA has collapsed after the companies failed to overcome "complex" issues. The merger would have created the world's biggest advertising agency. The bosses of Omnicom and Publicis Groupe SA, Maurice Levy and John Wren, came under scrutiny today after the $35 billion advertising merger collapsed citing "complex" issues.
US-based Omnicom and its French rival began talks over a merger of equals in July but issues including its complex tax structure and the companies' divergent cultures halted the discussions. Lévy, 71, who has led France’s Publicis since 1987, said he expected the company will “start reopening the question of succession” by September, although he gave no indication that he will step down imminently.
The firms were also unable to agree on who would be chief financial officer a crucial role given the contrasted structures of the organisations. He and Wren, 61, boss of America’s Omnicom since 1997, axed plans for the merger late last night after months of delays.
In a joint statement, Publicis chief Maurice Lévy and Omnicom boss John Wren said: "The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders. “The two companies were not in total agreement to put it mildly,” said Lévy.
“We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another." The tie-up, announced last July, was meant to be the crowning achievement of the two men’s careers as they were to become co-chief executives of the world’s biggest advertising group, overtaking Britain’s WPP.
Levy had previously postponed retirement plans as succession at Publicis remained an open issue prior to the deal. Lévy explained that calling off the wedding was better than a divorce. “It is much better not to go to the church than to go to the judge,” he said.
It had been hoped the 50-50 deal with Levy and Wren joint-chief executives would help the advertising giants compete with online giants Facebook and Google in the digital space. Regulatory and tax issues had led to delays but Lévy admitted there were cultural differences with Omnicom. He felt the Americans were going to put in place executives who did not understand the French group’s culture. The Publicis boss insisted he still felt the merger was “a superb idea”.
Neither company will pay a termination fee. WPP boss Sir Martin Sorrell, 69, a long-time rival of Lévy and Wren, did little to disguise his glee at the merger’s demise. “We said in July it didn’t make much sense,” he explained. “I think it was done more for emotional reasons and egotistical reasons. There was no strategy explained to people and clients and ultimately that’s why it fell apart.”
Trade body ISBA, the voice of British advertisers, welcomed the deal’s collapse as it would “allay advertiser concerns over market dominance”. But it is a blow to bankers and lawyers, including Rothschild, which advised Publicis, and Omnicom’s adviser Moelis.