Publicis and Omnicom, two of the world’s marketing and communications powerhouses, have issued a statement today announcing they have terminated their proposed merger.
The mutual agreement has been blamed on “difficulties in completing the transaction within a reasonable timeframe,” although tax issues, regulatory problems and rumours of infighting have marred the plans for some time.
In a joint statement, Maurice Lévy, chairman and chief executive officer of Publicis Groupe, and John Wren, president and chief executive officer of Omnicom Group, stated: “The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders.
“We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another.”
Both parties have released each other from all obligations with respect to the proposed transaction, and no termination fees will be payable by either party.
The firms had said that the deal would help them make savings of around £325 million by pooling their resources, and also give them access to a wider range of clients.
If the merger had gone ahead, it would have also created the world’s biggest ad firm worth £22.8 billion, making it a serious competitor to Martin Sorrell’s dominant WPP Group.
However, many industry commentators had remained sceptical of the plans, with some arguing it would place a squeeze on salaries whilst others said the only ones who would benefit would be top management and shareholders.
Commenting on the news, Keith Hunt, managing partner at marketing advisers Results International, said the only big winners after the announcement are likely to be the independent agencies.
“They were the ones most at risk from the massive firepower created via this mega-merger and will be feeling far safer now that it has gone away,” he said.
“On the people front there are likely be some senior executives from Publicis and Omnicom who may decide to try the independent route, either by setting up their own start-ups and taking clients with them or by taking equity stakes in independent agencies who may be courting them.
“The perfect storm of disillusioned staff and disillusioned clients potentially falling out of Publicis and Omnicom makes this a good time for independents.”
