The $35 billion merger of U.S.-based Omnicom and France’s Publicis collapsed Friday after a battle for control destroyed plans to create the world’s largest advertising agency.
The deal, heralded in July as a merger of equals that would enable the two agencies to compete more effectively in the digital arena, foundered on issues ranging from its complex tax structure to the firms’ divergent cultures.
The two sides were also losing major work — more than $1.5 billion in the past month alone — and did not want to let the uncertainty continue.
“I have not been able to convince John that balance is balance,” Publicis Chief Executive Maurice Levy said of his Omnicom counterpart, John Wren.
“Omnicom wanted their people to fill the CEO, CFO and general counsel jobs,” he told Reuters. “I thought that went too far. I was not ready to cede on this point.”
For his part, Wren said the two sides had failed to find a way past the strong corporate cultures that existed in each company.
On a conference call with analysts and reporters Friday, Wren summed up the broken deal with a nod to Twitter: “If I had to summarize in a tweet it would be, corporate culture, complexity and time. And I would still have 100 characters left.”
Two people familiar with the situation said relations between the two sides began to unravel in December, with tensions simmering between Levy and Wren, and the Frenchman believing the deal was turning into a takeover rather than a merger.
One person said the men met two weeks ago to agree what to do.
The key dispute over who should be chief financial officer would have influenced whether the new company inclined toward a centralized structure to manage costs, which Publicis argues has driven its higher margins, or Omnicom’s more devolved approach.
Neither company will pay a termination fee, and they will split the costs of the failed deal, such as legal fees.
With the deal off the cards, analysts predicted a period of turmoil ahead for the industry as Publicis and Omnicom seek to re-engage with clients after recent business losses.
Read the full story at reuters.com