French, US companies’ move creates an advertising giant
Print Edition
Publicis and Omnicom have announced merger plans to create the world’s biggest advertising group, worth US$35.1 billion. It’s a tie-up that could put pressure on rivals to do deals to keep pace.
The transaction marks a return of jumbo-sized mergers and acquisitions among the world’s “Big Six” advertising groups, which have spent the past few years buying up much smaller targets in emerging markets and among web marketing specialists.
The French and
Publicis said the transaction was expected to create “significant value for shareholders,” with expected synergies of US$500 million. The merged group would keep its head offices in
Maurice Levy, Publicis chief executive, said that Omnicom head John Wren and he had “conceived this merger to benefit our clients by bringing together the most comprehensive offering of analog and digital services.”
Levy also said the French government was supportive of the merger.
The deal is likely to push the remaining advertising agencies to consider mergers to keep up. Current leader WPP may make a move for US-based Interpublic,
“What would have been unthinkable previously would now make sense,” he said.
Together, Publicis and Omnicom had combined 2012 revenue of US$22.7 billion, with more than 130,000 employees, and they would overtake WPP, worth US$24.1 billion.
The deal would bring together Publicis brands such as Saatchi & Saatchi and Leo Burnett with Omnicom’s BBDO Worldwide and DDB Worldwide.
Wren and Levy will be joint CEOs for an initial integration and development period of 30 months, after which Levy will become non-executive chairman and Wren CEO, Publicis said.
The head of rival agency Havas questioned the logic of the merger, saying digital business and technology had made scale irrelevant, and that the uncertainties associated with large mergers would distract staff away from clients.
“I’m not sure this is in the best interests of their clients or their talent,” David Jones said. “Clients today want us to be faster, more agile, more nimble and more entrepreneurial, not bigger and more bureaucratic and more complex.”
French labor union CGT said the merger would fly in the face of the government’s ambitions to preserve French brands, adding that the merged group would be dominated by the
It called on the French government and competition authorities to avoid a monopoly situation being created, adding that it would mobilize to protect jobs.
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