New York based Omnicom and Paris based Publicis have signed (.pdf) a definitive agreement for a merger and the Publicis Omnicom Group claims that it will have a combined equity market capitalization of approximately $35.1 billion. Note that the transaction is subject to approval by the shareholders of both the companies and subject to receive regulatory approvals, however, the merger has been approved by board of directors of both the companies. The company expects to close the deal in the fourth quarter of 2013 or the first quarter of 2014.
After the merger, the combined group will have more than 130,000 employees. Besides this, Publicis Omnicom Group will be restructured and the CEOs of both the companies will lead the company as co-CEOs for 30 months, following which Maurice Lévy, Chairman and CEO of Publicis Groupe will become non-executive chairman and John Wren, CEO of Omnicom will continue as CEO. The Publicis Omnicom Group will have a single-tier board with 16 members. The combined entity will trade under OMC ticker on the New York Stock Exchange and Euronext and the holding company will be based in Netherlands.
In India, the Publicis Omnicom Group would include advertising agencies such as Publicis India, Publicis Capital, Publicis Ambience, Saatchi & Saatchi, Leo Burnett, BBH India, StarcomMediaVest, Zenith Optimedia, Vivaki, TBWA, RK Swamy BBDO, DDB Mudra, BBDO India, Mudra Max, OMD and Proximity, as indicated by Firstpost.
What They’re Saying
Anant Rangaswami from FirstPost is of the opinion that Publicis, in India, has been on an aggressive mood by bringing in Bobby Pawar from JWT to oversee the entire group’s creative product, and Partha Sinha from BBH India to oversee strategic planning. He also claims that there are at least two advertising agency acquisitions in pipeline, which will be announced shortly.
Also note that Publicis had been on an acquisition spree in India.
The Economic Times: While WPP is a market leader in India, one of the fallouts is to make Omnicom and Publicis at least as large as if not larger than Interpublic in India. While struggling overseas, Interpublic agencies like Lowe Lintas and Draftfcb+Ulka, with a portfolio of homegrown business, are among the larger agencies in the country.
NDTV: The move gives Publicis, which has faced questions about who will succeed 71-year-old CEO, Maurice Levy, access to Omnicom’s well-regarded senior leadership, said James Dix.
The Guardian: The merger will end WPP’s four-year dominance of the industry with an alliance vowing to hold its own against the digital media giants of Silicon Valley. The intend of the alliance is an attempt to create a counterpoint to balance the dwindling power of traditional marketing communications in a world now dominated by Google and Facebook, whose audiences are numbered in billions, dwarfing the influence of individual television channels and magazines.
Gigaom: Om Malik is of the opinion that media, content and technology are now in a sailor’s knot. Today the idea of what is media is being transformed by the emergence of two new mediums — wired and wireless broadband. All our concepts of media containers — television, newspaper, magazines are being tested by changing demographic and consumer behaviors. And hence merging of the two ad giants is of interest for technology market as well.
TechCrunch: Publicis and Omnicom’s rival WPP projects that by 2018, 40% of ad spend that it oversees will come from digital. That is driving a number of acquisitions and investments, but it is also fueling the rise of a new kind of advertising company focused around advertising technology (ad tech) to better measure, leverage and distribute ads in these new mediums. The rise of digital media is also dovetailing with the growth of advertising and digital opportunities in emerging markets like China, South America, India and so on.
Siliconvalleywatcher: Google and Facebook will have to work with a small number of very large agencies who are increasingly united on what works for them. The shift in the scale of the advertising agencies is a huge shift in buying power.
Quartz: While the merger is aimed at creating equals between the two organizations, Clients of the combined firms could protest since the deal is rife with conflicts of interest; Omnicom represents Pepsi, for instance, while Publicis has Coca-Cola.
Updated: Error in headline corrected