Omnicom and Publicis cancel merger
The Omnicom and Publicis merger, which was agreed upon last year, has been canceled.
The merger would have created the largest advertising company in the world – Publicis Omnicom Group.
In 2013 the two companies agreed to a merger, which was expected to create considerable value for shareholders and broaden the firms portfolio of agencies and services.
The advertising, marketing and media industries have experienced a significant transformation because of digital technology. As a result, over the past few years there have been many of mergers and acquisitions.
The merger between Publicis and Omnicon could have allowed the two to be better positioned to compete in digital media and allowed them to compete against Google and Facebook.
So, what went wrong?
According to the two firms, they canceled the deal because of challenges that “remained to be overcome”.
In addition, the slow pace at which things were developing caused a sense of severe uncertainty that had a negative impact on the two companies, with both firms losing more than $1.5 billion work in the past month alone.
Publicis Chief Executive Maurice Levy, mentioned some of the problems he was facing when coming to an agreement with Omnicom Chief Executive, John Wren, stating:
“I have not been able to convince John that balance is balance.” He pointed out that “Omnicom wanted their people to fill the CEO, CFO and general counsel jobs. I thought that went too far. I was not ready to cede on this point.”
In a joint statement released on Friday, the CEOs of the two firms 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 and their employees, clients and shareholders.”
“We have thus jointly decided to proceed along our independent paths.
The two companies have said that they will “remain competitors, but maintain a great respect for one another.”
Some analysts pointed out that the merger of the two firms would have created a serious conflict of interest between their clients, with mergers having a tendency to make rival clients find other agencies.