Why did the Publicis-Omnicom Merger Die?
According to Wikipedia, here is a list of the 10 largest Ad agencies as of July 2013
- WPP Group, London $15.6 billion
- Omnicom Group, New York City $14.3 billion
- Publicis Groupe, Paris $7.7 billion
- Interpublic Group, New York City $6.693 billion
- Dentsu, Tokyo $3.1 billion
- Havas, Suresnes, France 1.77 billion euros
- Hakuhodo DY Holdings, Tokyo 1.2 trillion yen
- Merkle, Lanham, Maryland, $300 million
- Global Experience Specialists, subsidiary of Viad, $249.3 million
- Epsilon, subsidiary of Alliance Data
What would cause the #2 and #3 to want to merge? To take on #1? What would cause them to back out of the merger? It’s been long enough since the the decision to Not merge was made that many arm chair executives are weighing in on the reasons why and why not. If you did not see the Ad Age article I have include the Link and the first part of the article below.
It started in February of last year when John Wren visited Publicis Groupe and admired the company’s stunning Champs Élysées view. Maurice Lévy, CEO of the French agency giant, was quick to say that it could belong to the Omnicom chief. That “joke,” as Lévy later called it, led to a proposal to combine advertising’s second- and third-largest players to create a $24 billion colossus to unseat leader WPP, creating unprecedented industry scale.
It’s not just about losing face after a highly publicized effort to reshape the advertising landscape. The ease with which the two are walking away from the deal begs the question of the very rationale supporting its initial concept. Both parties now call the transaction an “opportunity,” not a “necessity.” Nonetheless, during the process each side revealed a weakness in praising the other’s strength: for Omnicom, it was Publicis’ digital resources and for Publicis, Omnicom’s creative assets. Officially, the complexities in attaining U.K. tax domicile and regulatory approvals, and subsequent transaction closing delays, are blamed for the deal’s collapse. But insiders insist the lack of consensus about management structure and top personnel decisions are the real reason, something even Omnicom’s Wren hints at.