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Nothing mad about ad men's mega merger

Monday, July 29, 2013 - 02:37

July 29 - A proposed mega-merger between global ad agencies Publicis and Omnicom could bring rival accounts such as Coca-Cola and PepsiCo under one firm. The potential $35 billion deal raises other conflicts, and will need approval by competition regulators in as many as 45 countries. Joanna Partridge reports

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They're already close - but these top ad men want to get even closer. The CEO of French advertising agency Publicis and head of U.S. rival Omnicom are planning a mega merger. Maurice Levy and John Wren want to create the world's biggest ad agency - a deal worth over $35 billion - and they'd be Co-CEOs for the first two and half years. SOUNDBITE: PUBLICIS CEO, MAURICE LEVY, SAYING (English): "The name of the new company will be Publicis Omnicom Group and the split of ownership will be roughly 50/50. It's approximately that amount of money we intend to be treated both in New York Stock Exchange and Euronext, and we will be doing this under the ticket symbol of OMC and we have roughly the same capitalisation." The firms believe marriage will help them to better face challenges brought about by big technology firms like Facebook and Google. The deal would bring rival accounts of Coca-Cola and Pepsi Co under one roof. As well as Samsung and Apple. And those are just some of the conflicts raised by the deal. It'll come in for extensive scrutiny by competition regulators - in an estimated 45 countries - says Christopher Beauchamp from IG. SOUNDBITE: Chris Beauchamp, Market Analyst, IG, saying (English): "The idea of having an advertising company controlling a large share of the market is something that you probably should be worried about I think, given the importance of advertising spend to many companies and the sensitivity of companies to that advertising spend in harder times. It's something I think that regulators are going to take a long hard look at." Both groups may have to sell some of their smaller brands. But it's thought France won't object despite the American connection and the likellihood that Omnicom investors will do better in the short-term. Omnicom shares were up 7% in early trade, and Publicis shares rose by as much as 6%. Claudio Aspesi is from Sandford Bernstein. SOUNDBITE: Claudio Aspesi, Senior Research Analyst, Sandford C. Bernstein, saying (English): "They were invested until Friday in a company that was very U.S.-centric and less developed on the digital side than Publicis or even than WPP. Now they get to catch up." Few predicted such a huge transaction between two of the Big Six global advertising groups, which have spent the past few years buying up smaller firms in emerging markets. If completed, it will put pressure on other firms - including market leader WPP - to consider similar tie-ups. ///

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Nothing mad about ad men's mega merger

Monday, July 29, 2013 - 02:37