Advertising giants Omnicom Group and Publicis Groupe SA have mutually agreed to call off their proposed plan to team up in a $35-billion ‘merger of equals’, which could have brought rival accounts such as Coca-Cola and PepsiCo under one roof, citing difficulties in completing the transaction within a reasonable time frame.
The decision by the two companies to split was unanimously approved by the management board and the supervisory board of France-based firm Publicis Groupe and the board of directors at the US-based rival Omnicom.
The proposed mega merger, which was announced in July last year and was expected to be completed by the end of December 2013, was supposed to create the world’s-largest ad-holding firm in terms of revenue. Historically as well, it could have been the largest agency deal, leaving behind Dentsu Inc.'s $4.9 billion acquisition of Aegis Group in March 2013 and WPP's $4.7 billion acquisition of Young & Rubicam in 2000.
Omnicom and Publicis are owners of many of the most prominent ad networks in the world like ad agencies BBDO, Saatchi & Saatchi, DDB Worldwide, Leo Burnett and TBWA, apart from digital ad agencies like DigitasLBi and Razorfish and public relation firms like FleishmanHillard and Ketchum.
“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. We, of course, remain competitors, but maintain a great respect for one another,” Publicis chairman Maurice Levy and Omnicom CEO John Wren said in the joint statement on Thursday evening.
At the time of signing the agreement in July, the two companies had agreed that the shareholders would receive about 50 per cent of the equity in the new company—Publicis Omnicom Group—and where the two CEOs would share the top job for 30 months from the closing of the deal.
A $500 million termination fee would have applied if either company had decided to walk away unilaterally.
(Edited by Joby Puthuparampil Johnson)