It was billed as the biggest M&A deal in the history of advertising and a “merger of equals” but now the proposed $35 billion merger between the US group Omnicom and French advertising giant Publicis has been scrapped.
Speculation that the proposed marriage had hit the rocks has been rife for several months. Leaks from within both camps suggested the two companies could not agree on a number of issues including its tax structure and its new chief financial director. Most of all, however, two separate corporate cultures that could not be blended into one, was probably the biggest reason, according to insiders. Other cite the loss of clients to rival agencies, most notably WPP, as another bone of contention.
“There was no one factor,” said the Omnicom chief executive, John Wren immediately after the “uncoupling” was announced. “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. There was no clear finish line in sight.”
The two firms had justified the planned marriage as a way to provide scale and capital to cope with technological forces wrenching the advertising business. Now the bill for the abandoned wedding ceremony is likely to run into millions of dollars.
“The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one,” said Maurice Levy, the 72 year-old CEO of Publicis who had deferred his retirement until the merger was complete. Now his retirement is likely to be top of the agenda at the next AGM of the French group while it remains unclear whether or not Wren will survive what has been a very expensive and possibly damaging debacle for Omnicom.
Ever since the deal was announced last year WPP’s Sir Martin Sorrell has poured scorn on the proposed tie-up and has ridiculed the two agency groups for even thinking that it would work. In a recent interview on US channel CNBC he said that WPP had begun to pick up clients from its two rivals as they argued over the fine print of the deal. He called it a “sorry saga” that was driven by egos and said the failed merger was a case of “the eyes being bigger than the tummy.”
Stockbroking analysts, many of whom were sceptical of the proposed merger, are now saying the consolidation within the global advertising industry is still not off the agenda and that attention is likely to turn to other agency groups like Havas and IPG.
