* "Merger of equals" label questioned by some
* U.S. to take leadership role after 30 month transition
* Levy calls for "unified group" without "silly games"
By Christian Plumb and Leila Abboud
PARIS, July 29 The advertising giant to be
formed from the merger of Publicis and Omnicom
may resolve any clash between its French and U.S. arms by taking
on a more American identity, some industry observers said on
The two companies have portrayed the deal that will create a
$35 billion industry leader as a "merger of equals". They have
similar market capitalisations and the new group's board will be
equally split between representatives of Publicis and Omnicom.
However, the merged company will be led by an American CEO
after a 30 month transition and overseen from a headquarters on
neutral ground in the Netherlands - far from the Paris home of
Publicis near the Arc de Triomphe. Maurice Levy, the veteran CEO
of Publicis whose French-accented English is a reminder of the
agency's roots, will take the less visible role of non-executive
"It's a step the French company has taken because they've
crossed the bridge of realising they don't need or want to be
French anymore," said one senior Paris-based banker. "From an
organisational standpoint and a markets standpoint it's going to
be an American-based company."
A second banker dismissed the notion of a merger of equals,
saying the fact that Omnicom would end up in the driver's seat
could be positive.
"American companies tend to be pretty comfortable being in
charge from the get-go - and that's certainly the case here," he
said. "At the end of two years the sole CEO will be American.
The main listing will be in New York. The holding company will
be in the Netherlands. It's not hard to figure out what's going
on," said the banker.
Clarity on control could help the company avoid the fate of
high profile mergers such as the Daimler-Chrysler deal of the
late 1990s. This suffered from cultural clashes and a lack of
overlap in the cars they sold until it was unravelled.
Similarly, the merged telecoms equipment group
Alcatel-Lucent bleeds cash while video games maker
Activision Blizzard is buying itself out of its merger
with the games arm of Vivendi in an $8 billion deal.
NO "SILLY GAMES"?
One former advertising executive said an occasional problem
at Publicis was the pace of decision-making.
"Some of this is driven by the individual at the top, some
of it is defined by geographic culture," the executive said.
"There is a lot of discussion at Publicis, whereas in an
American culture, the issue is on the table, a decision gets
made and everyone leaves the room."
Levy has dismissed the possibility of tensions in the
Omnicom deal case. "It's in everyone's interest for this to be
one unified group, with a single management and culture," he
said on Sunday. "We need to create a harmonious team and not
play silly games with people trying to impose being American or
Omnicom's CEO John Wren sounded a similar note, insisting
that the merged group would keep the Publicis building on the
Champs Elysees and portraying the plans for a Dutch headquarters
as a sign that Omnicom is shedding some of its U.S. identity.
Such arguments fell on deaf ears at France's CGT trade
union. It said the merger went against the French government's
effort to preserve French brands, adding that the new group
would be dominated by the U.S. side in many areas.
The union called on the government and competition
authorities to avoid a monopoly situation being created, adding
that it would mobilise to protect jobs.
While a transition to a more U.S.-centric culture could
eliminate one source of long-term bickering, the new entity may
also be helped by the fact that both holding companies already
grouped a diverse stable of agencies with different characters
and styles, one analyst said.
"Within the advertising agency arena, M&A is embedded as a
corporate strategy, so many of these companies have been part of
deals consistently over the last 30 years and maintained
profound brand independence, so they avoid conflicting companies
where they can," said Jefferies analyst David Reynolds.
Respect for differing cultures under one roof has been
particularly strong at the pre-merger Omnicom, which managed to
keep the differences between such agencies as BBDO and TBWQ,
said David Kershaw CEO of M&C Saatchi.
However, he added: "The bigger it gets, the more homogenous
it becomes, the more those cultures get homogenised."