In a joint statement released yesterday, the global advertising holding groups Publicis and Omnicom officially announced that they had terminated their proposed $35 million merger, following weeks of speculation. The agreement was mutual, and came about at this time primarily due to the intense difficulties expected in completing the merger within a reasonable timeframe which would have suited both companies. Both parties have released one another from any and all obligations with respect to the transaction, and there will be no termination fees due. It is (to use modern celebrity tabloid parlance) very much a 'conscious uncoupling'. The decision was approved unanimously by both the management board and supervisory board at Publicis and the board of directors at Omnicom.
Both parties have released one another from any and all obligations with respect to the transaction, and there will be no termination fees due
The deal was set to create the world's largest advertising company, overtaking both companies rival WPP. However the merger became mired by managerial in-fighting, regulatory trouble and tax issues, all of which led to most experts believing the merger would eventually fall through. As such, the announcements yesterday didn't come as much of a surprise to anyone had been following the story. An unnamed source familiar with the situation believes it is “Better to have each company going back on its own,” because they believed “The risk was too high.” They added “It was not a merger of necessity,” but admits the collapse of the merger has been a disappointment. WPP chief executive Sir Martin Sorrell is certainly not surprised that the deal has fallen apart, he feels that the deal “Seems to have been driven by emotion to knock WPP off its perch,” and rather smugly claims that “In the end, it was a case of their eyes being bigger than their tummies.”
Maurice Levy (right) and John Wren (left)
In the statement, Publicis CEO and Chairman Maurice Levy, and Omnicom CEO and President John Wren stated; "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. 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 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” Maurice Levy and John Wren
Omnicom has scheduled a conference call for 8:30AM (EST) this morning to discuss the mutual termination of the merger. The conference will be simulcast and archived online at http://www.omnicomgroup.com/FinancialWebcasts. Thus far, Publicis has yet to announce a similar conference call themselves.
Official Omnicom Group Website
Official Publicis Group Website
Benjamin Hiorns is a freelance writer and musician from the UK who saw the inevitable collapse of this merger coming weeks ago (not that he's bragging or anything of course).
