China merger delay grates on Omnicom/Publicis nerves

When Omnicom and Publicis Groupe announced their intention to merge in the summer it was thought that the combined group’s share of media buying (in some parts of the Americas it will reach over 40 per cent) would be the main obstacle.

But that reckoned without the Chinese authorities.

UnknownOmnicom CEO John Wren (scheduled to share such duties initially with PG’s Maurice Levy and then take over himself) announced yesterday that the merger would be put back to the second half of 2014 at the earliest because Chinese regulators were still poring over the details (or had placed them in a drawer somewhere and thrown away the key).

Wren was very cool and calm about it all (partly because Omnicom’s own figures for the fourth quarter showed an OK increase in revenues of 2.9 per cent) but the Chinese delaying action must be driving him, and lots of other people, nuts.

The Chinese delay shouldn’t come as a surprise (indeed it should have been anticipated by the two parties). Much the same happened with the acquisition of media buyer Aegis by Japan’s Dentsu. That, however, was complicated by the bad blood between the Chinese government and that of Japan over various contested territories in the region.

But Omnicom and PG clearly thought the absence (mostly) of such issues between the US and China would help to speed the $35bn merger through. They are now in the rather absurd position of competing with each other for various accounts even while drawing up plans to put the two companies together.

These, in turn, will lead to a swathe of redundancies and top management changes as the merged company tries to achieve its promised $500m cost savings. Which is hardly conducive to outperformance against the likes of WPP, busily snapping at its (their) heels like a veritable Doberhuahua.

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