It’s official – Omnicom/Publicis merger is off

Omnicom and Publicis Groupe have called off their mega-merger, which would have created a $35bn marcoms supergroup.

The two have released the following statement:

PUBLICIS AND OMNICOM AGREE TO TERMINATE PROPOSED MERGER OF EQUALS

Publicis Groupe S.A. (Euronext Paris: PUB) and Omnicom Group Inc. (NYSE: OMC) today jointly announced that they have terminated their proposed merger of equals by mutual agreement, in view of difficulties in completing the transaction within a reasonable timeframe. The parties have released each other from all obligations with respect to the proposed transaction, and no termination fees will be payable by either party.

This decision was unanimously approved by the Management Board and the Supervisory Board of Publicis Groupe and the Board of Directors of Omnicom.

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.”

We wait to see what the fall-out from this will be but one happy bunny will be WPP boss Sir Martin Sorrell, who has said throughout that the merger would never work (although even he surely doubted that it would collapse so ignominiously). WPP therefore remains the world’s biggest marcoms group.

the writing was on the wall for the merger when Wren confessed that the merged group’s plans to be based in the UK for tax purposes had hit opposition from the UK tax authorities. The combined group’s promised $500m cost savings then looked impossible.

There will inevitably be question marks over the future of Wren and Levy who have seen the biggest deal of their lives collapse. And there will be sighs of relief all round from staff at the two companies’ various agencies, who faced an uncertain future following a merger.

Update

Just hours after the merger was called off, the blame game seems to be making its inevitable appearance. PG boss Levy has claimed that the supposed merger of equals was turning into a takeover of his company, something that would have made PG founder Marcel Bleustein-Blanchet “turn in his grave.”

Why the deal had taken such a turn is a trifle unclear, unless it was the dispute over who should be CFO of the merged company with Wren insisting that his man Randy Weisenburger should get the job. But Levy is adamant that a takeover “was unacceptable to me.”

Wren has been rather cooler, observing that the merger collapse was a “disappointment” as “our businesses were complementary in many ways. On the edges, they had the resources that we didn’t possess. They had some resources that we didn’t possess. We really believed that we could cross sell to our client base.”

And Sir Martin Sorrell (we’d better not forget him) says: “(the deal) seems to have been driven by emotion to knock WPP off its perch and, of course, by French charm. In the end it was a case of eyes bigger than tummy.”

Both Wren and Levy deny that they will turn their attention to Interpublic now (as has Sorrell throughout). We’ll see. If the IPG share price rises it will be a sign that something is afoot. Levy came close to bidding for IPG at the end of 2012.