* Says yet to get approval for tax residency in the UK
* Failure to make merger tax-free for investors could break
the deal - analyst
* U.S. revenue rises 4 pct at Omnicom, 5 pct at Interpublic
* Omnicom 1st-qtr revenue $3.50 bln vs est $3.48 bln
* Interpublic revenue $1.64 bln vs est $1.60 bln
(Adds details from conference call, analyst's comment)
By Sruthi Ramakrishnan
April 22 Omnicom Group Inc, the No. 1
U.S. advertising company, said it was unable to predict when its
$35.1 billion merger with France's Publicis Groupe SA
would close as the deal was yet to win some key approvals.
Omnicom's shares fell as much as 3.6 percent in early trade.
"At this point it's not practical to predict exactly when
the transaction will close," Chief Executive John Wren said on
Tuesday after the company reported better-than-expected
Omnicom, which in October expected the merger to close in
early 2014, said in February that the deal was likely to close
"a little bit into the third quarter".
The company said it was yet to receive approval from
antitrust authorities in China and for establishing tax
residency in the United Kingdom.
Wren said if the companies were unable to obtain the tax
residency approvals, "it could affect the likelihood of
satisfaction of the conditions to closing of our deal."
Any major tax implication for investors could be a potential
deal breaker as both companies are trying to make the merger
tax-free for their shareholders, Edward Jones analyst Robin
Diedrich told Reuters.
"I think there's definitely some additional doubt cast on
the deal getting done," she added.
The tax residency will have to be approved by the revenue
and customs authority in the United Kingdom and the finance
ministry of the Netherlands, where the new company will be
Tax approval from France is also pending, the company said.
"With respect to a number of items (for receiving tax
approvals)... there is no Plan B. Those things are requirements
to get to a closing," Wren said.
Omnicom, which owns agencies such as BBDO Worldwide and
Goodby, Silverstein & Partners, warned that it would need to
withdraw and resubmit its filings if China's regulator was
unable to resolve all questions by June 16.
HIGHER U.S. SPENDING
Omnicom and closest U.S. rival Interpublic Group of Cos
reported better-than-expected revenue for the first
quarter, mainly due to higher ad spending in their home market.
Revenue from the United States grew 4 percent for Omnicom
and 5 percent for Interpublic.
Interpublic, which owns McCann Erickson and Draftfcb,
reported a 7.7 percent rise in international revenue, as well as
its first quarter of growth in Continental Europe in over two
years. International revenue had declined in the prior three
"We saw solid contributions from across our agency
portfolio, with strength in the U.S., as well as significant
growth in Latin America and Asia," Interpublic Chief Executive
Michael Roth said in a statement.
Omnicom's total revenue rose 3 percent to $3.50 billion, and
reported net profit available for common shareholders of $201.4
million, or 77 cents per share.
Excluding merger expenses, the company earned 80 cents per
Analysts on average had expected earnings of 79 cents per
share on revenue of $3.48 billion, according to Thomson Reuters
Interpublic's revenue rose 6.1 percent to $1.64 billion,
beating the average analyst estimate of $1.60 billion.
Interpublic reported a smaller-than-expected loss
attributable to common shareholders of $20.9 million, or 5 cents
per share. Analysts had expected a loss of 8 cents per share.
Omnicom said organic growth increased revenue by 4.3
Interpublic reported a 6.6 percent rise in organic revenue
and said it remained "well-positioned to meet or exceed" its
2014 target of 3 to 4 percent organic growth and operating
margin of 10.3 percent or better.
Omnicom's shares were down 1.35 percent at $70.52 in
afternoon trading on the New York Stock Exchange on Tuesday,
while Interpublic's shares were up 4.2 percent at $17.57.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by