Havas CEO questions Publicis-Omnicom merger rationale

PARIS, July 28 Sun Jul 28, 2013 6:00am EDT

PARIS, July 28 (Reuters) - The head of French advertising agency Havas on Sunday questioned the logic of a planned merger between larger global rivals Publicis and Omnicom, saying it was not in the best interests of clients or staff.

The world's second- and third-largest ad groups are expected to unveil a plan to merge to overtake current leader WPP , a source familiar with the situation has said. Publicis has called a news conference for 1200 GMT on Sunday.

"I'm not sure this is in the best interests of their clients or their talent," Havas chief executive David Jones said in a statement. "Clients today want us to be faster, more agile, more nimble and more entrepreneurial, not bigger and more bureaucratic and more complex."

Publicis and Omnicom have so far not commented on whether they do intend to merge and what the rationale would be. The combined group would have a market capitalisation of around $30 billion and annual sales of around $23 billion.

The deal would reshape the advertising industry's big players when the growth of internet marketing is leading to rapid changes in how companies sell products and control their image.

"It's a massively interesting and surprising move," Jones said. "The industry's obsession with mergers and acquisitions still amazes me particularly in a world where digital and technology have made scale irrelevant."

The CEO pointed to Instagram and Facebook as examples of companies that operate with slim staffing but have vast numbers of clients.

"Our business is very simple - it's about clients and talented employees - and as I said, I'm not sure this move is good for either of them," Havas' Jones said.

Havas has a market capitalisation of around 2.1 billion euros ($2.79 billion) and sales in 2012 were 1.8 billion euros.

Omnicom had a market capitalisation of $16.8 billion at the close of trading on Friday, while Publicis was valued at 12.5 billion euros.

Publicis CEO Maurice Levy has turned Publicis into a global force during his 26 year tenure largely through savvy deal-making and a prescient push into internet and digital marketing.