A deal announced last year to create the world’s largest advertising firm has been called off after the two firms, French giant Publicis and US leader Omnicom, decided that it was taking too long to complete. There had also been considerable concerns at Publicis that the deal was leaning more in favour of Omnicom, amounting to little more than a takeover.
The spectre of an industry giant worth $35.1bn had concerned rival firms, as well as regulators, over a lack of competition in the struggling advertising market. With revenues down for a number of years, firms have been looking at ways to boost their returns.
In a joint statement released this morning, the two companies said that the slow progress had created uncertainty and ultimately proven problematic for shareholders, employees and clients.
“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.”
While Publicis CEO Maurice Lévy and Omnicon chief John Wren announced the merger last year with great enthusiasm, the French firm seems to have gone cold on the idea after apparent risks that it would be subsumed by its US partner.
Lévy told France’s BFM channel in an interview yesterday that these concerns had proven a “real barrier” to negotiations, adding, “We never envisaged anything but a merger of equals.”
Reacting enthusiastically to the news of the collapse was WPP chief Sir Martin Sorrell, the leading rival to the two firms. In an email to the Wall Street Journal, Sorrell said it was “a case of eyes bigger than the tummy”. He added, “Two CEOs sitting together for six months without expensive advisers can’t make a deal, especially if they haven’t figured out the details before announcing. It showed.”
Sorrell went onto tell CNBC that the deal was driven by ego, and that both Publicis and Omnicom wanted to do anything to wrestle control of the industry from his firm.
“I think this deal was driven by ego issues and emotional issues, I think both CEOs wanted to try and dislodge WPP from its number one perch and so it was emotional and egotistical. It was also a case of eyes being bigger than your tummy.”
