Publicis, Omnicom merging to create an advertising powerhouse
29 Jul 2013
Omnicom Group Inc and Publicis Groupe SA have agreed on a trans-Atlantic merger to create the world's largest company providing communications, advertising, marketing and digital services, with combined revenues of $22.7 billion (€17.7 billion).
The all-stock merger of the Publicis and Omnicom groups will create an entity with a combined market capitalisation of approximately $35.1 billion or €26.5 billion. (See: Two top ad firms Publicis, Omnicom in merger talks)
Publicis and Omnicom expect the merger to result in savings of about $500 million. Pending regulatory and stockholder approvals, the merger is expected to be completed by the first quarter of 2014.
Shareholders of Paris-based Publicis and New York-based Omnicom will each hold about 50 per cent of the new entity, Publicis Omnicom Group.
The new holding company will be based in the Netherlands, with operating offices in Paris and New York.
The merged Publicis Omnicom Group, which brings together two iconic agency brands with industry-leading services, global reach and talent, will topple current market leader WPP Plc as the world's largest advertising group.
Publicis and Omnicom shareholders will each hold approximately 50 per cent of the new company's equity. The new entity is expected to be listed on the NYSE and Euronext Paris and included in S&P 500 and CAC 40.
Publicis Omnicom Group will be jointly led by Omnicom CEO John Wren and Publicis Groupe CEO Maurice Lévy as co-CEOs.
Omnicom chairman Bruce Crawford will be chairman of Publicis Omnicom for the first year following the deal's completion, after which Publicis's Elisabeth Badinter will take over.
Levy will become chairman after an integration and development period of 30 months.
''For many years, we have had great respect for one another as well as for the companies we each lead. This respect has grown in the past few months as we have worked to make this combination a reality. We look forward to co-leading the combined company and are excited about what our people can achieve together for our clients and our shareholders,'' Wren and Lévy said jointly.
Publicis Omnicom Group will bring together iconic agency brands such as BBDO, Saatchi & Saatchi, DDB, Leo Burnett, TBWA, Razorfish, Publicis Worldwide, Fleishman-Hillard, DigitasLBi, Ketchum, StarcomMediaVest, OMD, BBH, Interbrand, Mslgroup, Rapp, Publicis Healthcare Communications Group, Proximity, Rosetta, CDM, ZenithOptimedia and Goodby, Silverstein & Partners among others.
Omnicom, the world's second-largest advertising firm, has companies PepsiCo Inc, Nissan Motor Co and Royal Philips Electronics NV, among others of similar stature as its clients, and some accounts that overlap with publicis, such as McDonald's Corp and Procter & Gamble Co.
Publicis, the third-largest advertising firm, has a large portfolio of digital assets that includes Digitas, LBi International and Razorfish, a client list that has Bank of America Corp, Coca-Cola Co and BMW AG, as well as some of the emerging market agencies.
Like the WPP Group, both Publicis and Omnicom have grown through consolidation over decades as they vie with each other for accounts.
"The merger, which has been unanimously approved by the boards of directors of both companies, will provide compelling benefits for clients, employees and shareholders," the two companies said in a joint statement.
The merged group with more than 130,000 employees will be exceptionally placed to service clients better, the companies said.
The merger will also give the groups more clout to negotiate better ad rates for media placements on television, the internet and in print.
Publicis and Omnicom together spent about $3.34 billion, or roughly 41 per cent of the total spending by top 10 advertising agencies in media placements for clients, according to data compiled by Advertising Age last year. Against this, WPP accounted for $2.6 billion or 32 per cent of the total media spending.
Global ad spending is expected to rise about 5.1 per cent next year and by about 5.8 per cent in 2015, against the 3.5 per cent growth projected for 2013, according to ZenithOptimedia, a researcher attached to Publicis.
Publicis and Omnicom in India
Publicis and Omnicom have a substantial presence in India through individual agencies and creative media operating under their respective umbrellas.
For instance, Publicis's major agency presence is through creative agencies such as Leo Burnett, Publicis Worldwide (Publicis Ambience and Publicis Capital), BBH and Saatchi & Saatchi, while its media agencies include Starcom MediaVest Group, ZenithOptimedia and Vivaki.
On the other hand Omnicom operates through creative agencies that include DDB Mudra, TBWA, BBDO India and R K Swamy BBDO media operations through OMD and DDB Mudra Max.
How the combined entity aligns the competition between the respective - often rival - agencies under the formerly independent Publicis and Omnicom groups into a synergistic network remains to be seen. So, does its handling of clients with rival brands.
