Omnicom, Publicis call off proposed $35 billion merger
Credit: Reuters/Christian Hartmann
Maurice Levy (L) , French advertising group Publicis Chief executive, and John Wren, head of Omnicom Group react during a joint news conference in Paris, July 28, 2013.
Presented in July as a merger of equals, the deal began to seriously unwind after Omnicom Chief Executive John Wren expressed doubts about the deal, citing tax complications, during an earnings call in late April.
'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,' Wren and Publicis CEO Maurice Levy said in a joint statement on Thursday. '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 deal announced in July was called off over a number of sticking points including the companies' failure to agree on a chief financial officer who would have taken charge of implementing the deal, a source close to Publicis said.
Neither company will pay a termination fee.
Another source familiar with the matter said broader cultural differences between the two companies proved to be too difficult to overcome as tension over leadership and strategy came to a head. The boards of the two companies met on Thursday to unwind the deal, a third source said.
All three sources requested anonymity because they are not authorized to discuss the matter publicly.
The merger called for a 50-50 ownership split of the equity in the new company, Publicis Omnicom Group, with Wren and Levy serving as co-CEOs for 30 months from the closing.
One of the sources said that 'big egos' were involved.
The crucial choice of CFO, a key position that would determine how the company would operate, hewing either to Publicis' centralized structure or Omnicom's less controlling approach to subsidiaries, had been a particular sticking point as the months dragged on.
As the companies struggled to keep the merger on track they had faced a fight to retain clients and talent.
Wren and Levy, celebrating the deal with champagne toasts in Paris last summer, said it would enable them to better compete with the likes of Google Inc and Facebook Inc which dominate digital advertising, which accounts for nearly a quarter of global marketing spending.
(Additional reporting by Aman Shah in Bangalore, Jennifer Saba in New York, Jean-Michel Belot in Paris and Sophie Sassard in London; Editing by Eric Walsh, Ken Wills and Richard Chang)
Post a Comment for "Omnicom, Publicis call off proposed $35 billion merger"