Publicis to merge with Omnicom


publicisLogoPublicis Groupe and Omnicom Group agreed to merge in an all-stock transaction to create the world’s largest advertising company with $23 billion in revenue, topping market leader WPP. Shareholders of Paris-based Publicis and New York-based Omnicom will each hold about 50% of the new entity, Publicis Omnicom Group. Publicis CEO Maurice Levy and John Wren, his counterpart at Omnicom, will be co-CEOs, reports Bloomberg.

Subject to regulatory and stockholder approvals, the creation of a new industry leader with a market value of $35 billion is expected to be completed by the first quarter of 2014, the companies said at a joint press conference in Paris.

The alliance will bring under one roof agencies including Omnicom’s BBDO Worldwide and Publicis’s Leo Burnett and Saatchi & Saatchi, extending their presence in every major market. The merger will also give the owners more clout to negotiate for their clients better ad rates for media placements.

The new holding company will be based in the Netherlands, while the operating offices will remain in Paris and New York. Publicis and Omnicom project efficiencies of about $500 million from the combination.

Bloomberg reported 7/26 that the companies were in late-stage talks about a combination. Both CEOs said at the press conference that they don’t expect regulatory hurdles.

Besides BBDO, Omnicom’s networks include TBWA Worldwide and DDB Worldwide Communications Group. Publicis also owns Publicis Worldwide, Leo Burnett Worldwide and DigitasLBi.

Dominic Proctor, Global President of GroupM, WPP’s media investment unit, issued the following statement Sunday regarding the announced merger: “This is an interesting move. They are making it clear that a primary motive for the merger is achieving scale in media buying.  However, neither Omnicom nor Publicis was able to bring their investment teams together effectively as individual companies, so it will be fun to see if they can now do it together.  Getting scale in media investment management is critical for clients, but it only works if it all joins up.  We welcome a competitor in this space.  Media investment management relies heavily on scale, but scale counts for nothing if it continues to be disparate.”

See the Bloomberg story here