Publicis Omnicom Merger Rocks the Advertising World

Publicis Groupe's Maurice Lévy and Omnicom's John Wren on Sunday, July 28 in Paris, France.

Publicis Groupe’s Maurice Lévy and Omnicom’s John Wren on Sunday, July 28 in Paris, France.

Yesterday marked a major milestone in the history of advertising. A press conference held at 08:00am ET in Paris, France announced that the world’s second and third largest advertising companies respectively, Publicis Groupe SA and Omnicom Group Inc., had agreed to merge to form Publicis Omnicom Group.

Should the merger be successful, it would make Publicis Omnicom Group the largest communications holding company in the world, trumping the current global leader, WPP with a combined $35.1 billion market capitalization, $22.7 billion in expected revenue (based on 2012 figures) and 130,000 employees.

It was clear Publicis and Omnicom were very well-prepared for the announcement, allegedly moving the press conference from its scheduled Monday morning slot to Sunday morning to combat the rumor mill that kicked off on Friday. The announcement itself has rolled out pretty seamlessly and the industry has responded loudly.

Of note, were the opposing reactions of Havas CEO, David Jones, and WPP’s Sir Martin Sorrell. Jones hit the ground running with a response focused on what the merger actually means for clients and employees of the two companies, “Clients today want us to be faster, more agile, more nimble and more entrepreneurial, not bigger and more bureaucratic and more complex.” Sorrell chose to weather the storm a little, waiting to comment until later on Sunday night congratulating Publicis on “a great deal.”

Bloomberg has been credited for breaking the news on the “merger of equals” on Friday evening. When the stakes are this high, it’s a delicate balance between a scoop and a faux pas and the memory of the FT’s Alphaville blog breaking the rumored Publicis Groupe takeover of IPG last year was no doubt fresh in reporter’s minds, even if they did have the news ahead of the jump. Regardless of where the story originated, yesterday and today have seen an impressive amount of content churned out by trade and business reporters. Here’s a few of the key articles that have posted so far:

Omnicom, Publicis Merge Into Biggest Ad Firm by USA Today‘s Laura Petrecca. July 29, 2013, 12:50pm EDT. The combination should create $500 million in savings when they combine forces, according to a company statement. But the decrease in competition could present regulatory hurdles. There could be pushback from regulators in both the U.S. and France, said Rich Tullo, an analyst at Albert Fried & Co. The U.S. could be wary of one company controlling such a large portion of the market, he said.

Advertising Giants to Merge by Wall Street Journal‘s Suzanne Vranica and Ruth Bender. July 28, 2013. The combination of Omnicom Group of the U.S. and France’s Publicis Groupe SA is aimed at restoring the balance of power between advertising agencies and such Silicon Valley companies as Google Inc. GOOG -0.45% and Facebook Inc. FB +3.90% About 22% of global ad spending now is digital, according to eMarketer, a share projected to grow to 27% by 2017.

Merger Is Set To Create World’s Number One Ad Company by New York Times’ Tanzina Vega and Liz Alderman. July 28, 2013. In the early going at least, the new Publicis Omnicom Group would have co-chief executives: John D. Wren of Omnicom, based in New York, and Maurice Lévy of Publicis, based in Paris. But after 30 months, Mr. Wren, who is 60, would become sole chief executive and Mr. Lévy, 71, would be nonexecutive chairman.

Report: Omnicom-Publicis in Merger Talks by Ad Age‘s Bradley Johnson, Laurel Wentz and Rupal Parekh. July 26, 2013. This is not the first time such speculation has arisen — talk of Publicis merging with a rival crops up on a yearly basis. Last summer’s rumor was that the agency would combine with Interpublic Group of Cos.

What Clients Think About Publicis-Omnicom Megamerger by Ad Age’s Judann Pollack. July 29, 2013. At the Paris press conference yesterday announcing the proposed $23 billion advertising goliath Publicis Omnicom Group, John Wren said the potential for client conflicts “is not overwhelming given size of transaction,” but he added that he does expect “difficulties.” Among the seemingly most glaring conflicts is the prospect of archrivals Coca-Cola and PepsiCo and telecoms AT&T, Sprint, T-Mobile and Verizon living under the same holding-company roof.

Omnicom, Publicis Stocks Surge After Merger Announcement by Adweek’s Noreen O’Leary. July 29, 2013, 11:58 AM EDT. Both Omnicom and Publicis saw their stocks rise in heavier-than-usual volume this morning after their merger announcement, and the companies had an early morning briefing with analysts today where they outlined their rationale for combining forces. Publicis chief Maurice Lévy and Omnicom CEO John Wren divulged little beyond what they said in a Paris press conference yesterday. But they told analysts that they decided to merge because of the exponential growth of new media giants like Google, the blurring roles of media and ad agencies, the explosion of big data, and changing consumer behavior as a result of technology.

Publicis Omnicom Deal Expected To Spark New Wave Of Consolidation On Madison Avenue by Mediapost‘s Joe Mandese, July 27, 10:47 AM.
If the rationale given by John Wren and Maurice Levy for the merger of Omnicom and Publicis into the ad industry’s new dominant player is genuine, then it will ignite a frenzy of similar mergers as the rest of Madison Avenue consolidates to create the scale necessary to compete in a new ad world order being driven by “digital media giants” and the Big Data they generate.

The Real Story Behind Publicis + Omnicom Has Nothing to Do with Tech by AllThingsD’s Peter Kafka. July 29, 2013 at 6:12 am PT. Omnicom and Publicis, two of the world’s biggest ad companies, are merging. If regulators sign off, they will become the world’s biggest ad company. But, beyond the fact that the new company will be really, really big, what does that mean? And why should you care?

Don Draper, your antitrust attorney is on line 2 by Washington Post’s Steven Pearlstein. July 29 at 12:55 pm. A combined Omnicom-Publicis would represent Coca-Cola — and its chief rival, Pepsi. (Ian Waldie/Bloomberg News). It was probably only a matter of time that the global advertising/public relations/marketing industry would take a stab at more consolidation.  Four companies — WPP, Omnicom, Publicis and Interpublic — among them control about two-thirds of the global industry.  Now Numbers 2 and 3 – Omnicom and Publicis — have proposed to hook up, arguing that otherwise they will be bypassed by the likes of Facebook and Google in the fastest-growing digital media space.

Moelis, Rothschild Take Lead on Omnicom-Publicis Merger By Bloomberg‘s Matthew Campbell, Jacqueline Simmons & Matthew Monks. Jul 29, 2013 10:51 AM ET. For bankers, the merger of Publicis Groupe SA (PUB) and Omnicom Group Inc. (OMC) was notable for what it didn’t involve: the participation of a single large investment bank. Instead, New York-based boutique Moelis & Co. and Rothschild, the storied Paris-based merger adviser, worked with Omnicom and Publicis respectively, shutting out their bigger competitors. They stand to reap as much as $70 million in fees, according to New York-based researcher Freeman & Co.

Omnicom-Publicis: Still Too Many People, Not Enough Robots by Businessweek’s Kyle Stock. July 29, 2013. Madison Avenue looks a little more foreboding after the announcement of a $35.1 billion merger of Omnicom (OMC), a U.S. ad giant, and Publicis Groupe (PUBGY), its French rival. The massive deal, we are told, isn’t about synergies or economies of scale or any of the other buzzwords M&A bankers like to throw around. It’s about data—building a giant engine for more efficiently churning clicks and links and “likes” into an automated ad machine like Google (GOOG).

Merger of Omnicom, Publicis will shake up Chicago ad market by Sun TimesSandra Guy. July 28, 2013 9:22AM. Publicis and Omnicom have announced merger plans to create the world. A surprising announcement Sunday of the merger of two of the world’s largest advertising agencies may not lead to Chicago layoffs immediately, but it will shake up the local market by putting fierce rivals such as Leo Burnett and DDD Chicago under one roof and raising questions about who’s in charge, experts say.

Advertising stocks gain on Omnicom-Publicis merger by MarketWatch. Shares of advertising firms Interpublic Group of Cos. IPG +4.60% and Omnicom Group Inc. OMC +0.68% rallied on Monday, making them some of the top gainers in the S&P 500 index SPX -0.39% after the Sunday announcement that Omnicom and France’s Publicis Groupe FR:PUB +0.08% will merge in the advertising industry’s biggest deal ever.

Posted on July 29, 2013, in The Hit Board and tagged , , , , , . Bookmark the permalink. Leave a comment.

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