The combination of Publicis, based in Paris, and Omnicom, based in New York, would supplant the advertising industry leader, WPP of London. While Omnicom is slightly bigger than Publicis, the deal is being billed as a merger of equals that would have a combined stock market value of more than $30 billion.
News on Friday of talks between the companies was a surprise to analysts and most of Madison Avenue, including some employees in each agency. On Saturday, Publicis said planned to make a “major corporate announcement” on Sunday. An Omnicom spokeswoman did not return requests for comment. A Publicis spokeswoman declined to comment.
The marriage would bring under one roof separate networks of ad agencies — including BBDO, TBWA and DDB under Omnicom, and Leo Burnett and Saatchi Saatchi under Publicis. Collectively, the conglomerates represent some of the world’s largest brands including ATT, Visa and Pepsi at Omnicom and McDonald’s, Coca-Cola and Wal-Mart at Publicis. How the agencies would handle potential conflicts is expected to be addressed by the companies on Sunday.
In an interview with The New York Times this month, Publicis’s longtime chief, Maurice Lévy, said he expected much of the growth in the advertising sector to come from emerging markets and mobile and digital advertising. Publicis has been making aggressive acquisitions in digital advertising including agencies like Rosetta and Razorfish.
“I think we are all talking a lot about what the future markets of mobile will be and how we will be able to get the revenue we are expecting from this market,” Mr. Lévy said, citing a $15 million investment in a mobile polling start-up that is focused on emerging markets like Africa. “It is a huge market with incredible possibility for the future. Everyone is fighting very hard and trying to find solutions to get these next billion consumers,” he said.
Omnicom, which analysts say has focused more on expanding its digital operations organically as opposed to through acquisitions, stands to benefit from the media buying power of the Starcom MediaVest Group, a division of Publicis that is one of the largest media agencies in the world. In April, Starcom signed a multiyear deal with Twitter to combine some of the resources that they both use for measuring and tracking data and advertising. That deal was estimated to be hundreds of millions of dollars.
Last year, revenue at Publicis increased nearly 14 percent to $8.8 billion, while revenue at Omnicom increased 2.5 percent to $14.2 billion.
The combined company could be jointly run by Mr. Lévy, who has been with Publicis since 1987, and John Wren, who has led Omnicom since 1997, according to the people with knowledge of the talks, who spoke on the condition of anonymity because the deal was not completed. Mr. Lévy, 71, has been expected to name a successor since last year.
In a report on Saturday, Brian Wieser, a senior research analyst at Pivotal Research Group, said a merger would be “highly favorable” for the entire ad industry, and “negative for media owners in most traditional media,” because those companies would lose negotiating power.
Some analysts and industry players speculated whether the United States Justice Department would approve such a merger or whether the French government would bristle at a company that was not run by a French national.
But antitrust concerns could be eased if the new company positions itself less as a conglomerate of ad agencies and more of a data company competing with businesses like I.B.M. and Facebook, Mr. Wieser wrote. He added that maintaining Mr. Lévy at the helm or ensuring that a board was dominated by French nationals might be enough to assuage the French government.
News of the talks was first reported by Bloomberg.
Michael de la Merced contributed reporting.
Article source: http://www.nytimes.com/2013/07/28/business/media/omnicom-and-publicis-are-said-to-merge.html?partner=rss&emc=rss