Here’s a bit of interesting kite-flying: Adweek’s estimable Noreen O’Leary has unearthed a French analyst note from January speculating that Publicis Groupe might be on someone’s takeover menu. The most likely predators are said to be Omnicom, which tried to pull off a $35bn merger with Publicis back in 2014, and Japan’s Dentsu. Dentsu used to own 15 per cent of Publicis.
Natixis, Paris, analysts Jérôme Bodin and Pavel Govciyan wrote: “Twenty months on from the collapsed merger talks with Omnicom, we believe an acquisition of Publicis is now a feasible prospect. Publicis is now an extremely attractive target, from both a financial and strategic standpoint. The decline in its share price has left the group’s valuation extremely low. Meanwhile, the slump in the euro relative to the dollar makes it an appealing target for an American player.”
Publicis is trading at a 26 per cent discount to other big marcoms companies but it’s still valued at a hefty $13.1bn. Any such discount would disappear in a bidding war.
Publicis is having a torrid time, losing billions in US media billings (P&G, Coca-Cola and Walmart) and trying desperately to kick-start its creative agencies (Leo Burnett, Saatchi & Saatchi, Publicis Worldwide and BBH) which have suffered from under-investment and a talent outflow in the wake of a group-wide pay freeze. CEO Maurice Levy’s heir apparent Arthur Sadoun has been charged with that tricky task.
So who might chance their arm? Omnicom thought a combined business made sense two years ago, maybe it still does. Dentsu could probably raise the money. WPP? WPP’s Sir Martin Sorrell and Publicis’ Levy are not the best of pals, to be sure. A hostile bid from WPP would be like a rerun of the battle of Waterloo, but with more blood. But Sorrell can’t go on for ever (unless he knows something we don’t) and he may fancy a mega-coup over his old rival just to set the seal on his career.
More likely, we aver, would be a break-up bid from one or more private equity groups, maybe acting in concert with a WPP – as Providence Equity did in its recent £370m deal for the UK’s Chime Communications.
Publicis says more than 50 per cent of its business now comes from digital following its $3.7bn buy of tech group Sapient. It wouldn’t be that difficult to split the company in half. But who would want the other bits?