One of the biggest merger deals ever announced has been called off as a clash of personalities, disagreements over how to merge the firms and legal issues, have derailed plans for what would have been the world’s biggest ad agency.
Advertising giants Omnicom Group and Publicis Groupe called off the $35bn deal on Thursday, after the ‘merger of equals’ was challenged by differences in corporate culture, as well as difficulties in getting regulatory approvals. According to several media reports, a key contention point was also who to place in the pivotal position of Chief Financial Officer of the new advertising group.
[B]oth firms maintain that the failed merger will not turn into a bitter divorce
In a joint statement, Publicis Chairman Maurice Levy and Omnicom CEO 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.”
The deal, which was announced in July and originally expected to close by the end of 2013, was aimed at gearing the companies for advertising in a new, digital age, in which competition from Google and Facebook is growing increasingly fierce. Had the merger gone through, the firm would have been the world’s biggest ad agency, ahead of current leader WPP, and servicing clients such as Visa, Pepsi, McDonald’s and Walmart.
However, with the deal off, it’s clear that a year preparing for the merger has had major costs for both firms. Key clients such as Vodafone, Microsoft and pharmaceuticals giant GSK, have moved their billion-dollar advertising accounts away from Publicis and Omnicom in recent months. What’s more, sources close to the matter told The Telegraph that both firms are now battling to retain other major accounts, including Samsung’s multi-billion-dollar advertising business.
Yet both firms maintain that the failed merger will not turn into a bitter divorce.
“We have jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another,” the joint statement said.
Essentially, Omnicom and Publicis avoid a $500m termination fee, after both agreeing to call off the deal.