Publicis, Omnicom $35B Merger Is No More
The agency romance fizzled as irreconcilable differences emerged, and then came to an abrupt end.
"We, of course, remain competitors, but maintain a great respect for one another."
Publicis Groupe and Omnicom Group have announced their decision to pull the plug on their $35 billion proposed merger to become Publicis Omnicom Group.
The Management Board and Supervisory Board of Publicis Groupe and the Board of Directors of Omnicom Group unanimously approved the agencies' decision. The failed merger is the result of two giants' inability to complete the transaction within a reasonable time frame, according to an official release. Both companies have been relieved from all obligations pertaining to the proposed merger, and no termination fees will be charged.
"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,” Maurice Lévy, chairman and CEO of Publicis, and John Wren, president and CEO of Omnicom, said in a joint statement. “We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another."
Publicis and Omnicom first announced what was to be their “merger of equals” this past July and expected to complete the integration by the fourth quarter. The future looked bright for the marketing and communications titans: The two companies expected to generate about $500 million in “efficiencies,” and, as Direct Marketing News previously reported, each seemed to fill the other one's needs. While Publicis has a hearty digital stack, Omnicom comprises CRM, PR, and specialty communications firms. “This combination will enable us to leverage the skills of our exceptionally talented people, our broad public offering, enhanced global footprint, and tremendous roster of global and local clients," Wren had said in a statement at the time.
However, the road to finalizing the merger proved to be a slippery slope for the agency titans. Industry professionals expected brands to flee the behemoth for smaller, more flexible agencies where they could get more attention and have more say, as noted in “12 Things Direct Marketers Need to Know about the Omnicom-Publicis Merger.” The two marketing giants also struggled with leaderships positions. For instance, a few weeks ago Reuters reported that Publicis and Omnicom were grappling over which agency's CFO would oversee Publicis Omnicom Group. In addition, the merger proved to be an expensive endeavor. For instance, Omnicom spent $7 million in pre-tax, merger-related expenses (mostly professional fees) in Q1 2014, according to its quarterly results.
Martin Sorrell, CEO of advertising and marketing company WPP, was blunt in an emailed statement to Direct Marketing News sister publication PR Week: The failed merger was a result of “eyes bigger than tummy.”